S/P SEES DRAMATIC GROWTH FOR ASSET-BACKED DEBT
Standard and Poor's Corp said it
expects the asset-backed securities market to grow dramatically
over the next few years, spurred by what it termed the
compelling benefits of secured financing.
    S and P projected the market would grow to 100 billion dlrs
in the next five years. Investment bankers say the market
currently stands at roughly 11.9 billion dlrs.
    Assets used to secure the debt included auto loans, credit
cars, computer leases and corporate loans, S and P noted. The
most active issuers to date had two main motivations, lower
costs of funding and increased financial flexibility.
    Standard and Poor's pointed out that General Motors Corp
<GM>, Chrysler Corp <C> and Nissan Motor Co Ltd <NSAN> realized
funding advantages by issuing car loan backed debt. But more
important, these issuers were able to increase loan volume, and
hence car sales, without substantially increasing financial
leverage, the rating agency said.
    S and P noted that Bank of America, a unit of BankAmerica
Corp <BAC>, and RepublicBank Corp's <RPT> RepublicBank Delaware
unit issued credit card backed debt and also realized lower
funding costs while mitigating increased funding and liquidity
risks resulting from weak financial performance.
 Reuter
