U.S. asset-backed securities issuance for the first half was 6% higher than the year-earlier figure, as turmoil in the global-fixed income market subsided, Moody's Investors Service said.

Moody's said $103.5 billion of transactions were completed in the first half of 1999, compared with $97.8 billion a year earlier. According to Kent Becker, Moody's vice president, senior credit officer, and co-author of the report, "the increase in the market was spurred by the fast-growing vehicle-backed sector."

According to the rating agency, issuance of vehicle-backed transactions - which consists mostly of auto-backed deals but includes deals backed by other vehicles, such as trucks, recreational vehicles, and boats -made up about 25% of first-half asset-backed volume and rose by 45% from a year earlier.

But the home equity sector continued to lead the market, with a 37% market share, despite a slight decline in issuance compared with a year earlier.

Issuance of manufactured-housing securities was up 18%, while credit card issuance was flat. Student loan issuance, on the other hand, was down 46% from a year earlier, mainly because of lower volume from Sallie Mae, Moody's said.

The report called the credit quality picture for the first half of 1999 "mixed." It cited worsening credit quality for home equities, particularly in the high-loan-to-value sector, which showed annual losses rising to record levels.

Moody's near-term outlook is for heavier-than-usual volume in the third quarter, as issuers may front-load traditionally heavy fourth-quarter activity because of year-2000 computer problem concerns.

Moody's also expects credit quality to remain mixed for the rest of the year. Tighter underwriting standards in the credit card sector should result in stable or improving credit quality. However, the credit performance of the home equity sector is expected to continue to deteriorate, the rating agency said.

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