Y2K Means Busy 3Q


The rush to close securitizations before November, when jitters surrounding Y2K worries are expected to lead to a blow-out in spreads, is likely to lead to a busy couple of months in the European structured finance market.

Deals which are expected to launch in the next two weeks include Deutsche Bank's E195 million ($208 million) deal for Spanish airline Iberia; the second Geldilux CLO from HypoVereinsbank, worth E750 million; and a E500 million social mortgage deal for Finland's Housing Fund, via Paribas and Leonia.

Deals coming later in September and into October include Greenwich NatWest's E2.3 billion deal for Italiano di Credito Fondiario, packaging both performing and non-performing assets; two transactions from Irish issuer First Active the fourth in the Celtic Residential Irish Mortgage Securitisation series, via Paribas and worth up to E300 million, and a GBP300 million deal backed by U.K. mortgages via JP Morgan. Paribas is also expected to revisit its Domos mortgage securitization program with a deal worth up to E1 billion.

Despite the rush to issue before November, it is difficult to find buy-side source who thinks that worries about the millennium bug are a valid reason for not buying securitizations or a sell-side source who thinks that investors will be willing to buy both sides of the market dismiss the worries, but point at the other as the reason to expect a dislocation in the market.

"It has become an self-fulfiling prophecy; particularly after the disasters of the last quarters of 1997 and 1998. We're looking at it as a massive buying opportunity in the secondary market and if any opportunistic issuer approaches us we'll be more than ready to buy," said one London-based investor.