Wall Street Watch: Countrywide Prices an $847M Securitization

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Countrywide Home Loans priced an $847 million securitization of home equity loans last week -- its largest to date, the company said. The securitization was for 10 classes of fixed-rate loans and four of floating-rate loans.

The deal, lead managed by Lehman Brothers, comes at a time when asset-backed issuance has been on the rise. Issuance this quarter has been bolstered by investor concerns over Y2K implications and unpleasant memories of the credit crunch last October, said Martin Harding, managing director and co-head of the asset-backed securities group at Lehman.

Countrywide's transaction was "opportunistic and very well received in the face of all these issues that are out there and all the issuance," Mr. Harding said. "Most of the classes in the deal were oversubscribed."

Countrywide "has much more flexibility than a smaller, more thinly capitalized" company in the home equity sector, Mr. Harding said.

Analysts point to a dramatic change in the lineup of companies now issuing securities backed by home equity and manufactured-housing loans.

On Friday, GreenTree Financial Corp., part of Conseco, also came to market with $2 billion of manufactured-housing bonds in a deal also lead managed by Lehman.

GreenTree is among the new top players with sources of funding other than securitization, said Peter Rubinstein, senior vice president for asset-backed research with Prudential Securities.

The top ranks, especially the bank players, "have the ability, if they choose to, to defer issuance" by holding loans in portfolio if spreads widen rather than funding them at high costs, he added.

The volume of home equity and manufactured-housing securitizations is usually greatest toward the end of the quarter, said Mr. …