Ameriquest Mortgage was in the market last week with an unusual mortgage-backed sale that featured the involvement of two bond guarantors. The $2.5 billion deal had guarantee participation from Financial Guaranty Insurance Co. and Radian, in what appears to be the first time a non net-interest margin sale was completed with two wraps. Officials familiar with the deal said while the concept of using two monolines is not new and has been used for residual sales in the past, applying that structure to a large, billion-dollar plus transaction is novel concept. "It's really an extension of the technology used in NIMs; it's a little off the run," noted one professional familiar with the offering.
"The deal does have both Radian and FGIC risk in it, but we are the ones insuring the notes," said Tom Adams, senior managing director in charge of the consumer ABS group at FGIC, noting Radian's role is more akin to mortgage insurance than bond insurance. But with the two parties involved, Ameriquest was able to create enough credit enhancement and sell the notes as triple-As, with Morgan Stanley pricing the deal one basis point inside of talk last week at LIBOR plus 24bps. An Ameriquest official declined comment.