The credit card trust of one of the largest banks in America, Bank of America, has expanded in the US asset backed market by offering a $900 million credit card on Wednesday. As per the market sources, this move was undertaken with the solid support from all the investors.
The term "BACCT 2010-A1" is used to refer to this single tranche card. initially, the bank wanted to offer a credit of just $750 million on this card. however, it was later increased to $900 million.
One of the portfolio managers at the ABS said "There was a lot of interest in the sale. The deal was increased in size by $150 million to accommodate orders from investors."
the lead sale underwriter for this deal is Bank of America Merill Lynch. In addition to underwriting, the company was also marketing and liaising with all the investors and co-managers that included banks like Barclays Capital, Credit Suisse, J P Morgan Securities and Deutsche Bank Securities.
The $900 million credit card deal followed close on the heels of another credit card sale with exorbitant figures. Last week, the American Express Issuance Trust sold a card that carried a value of $911.8 million which is said to the larges so far. Though the investor interest in the field of securities has been on a rise, banks have been taking baby moves on this front. Depsite the securitization landscape undergoing a big change, a lot of leading credit card issuers have been conspicuous by their absence in the market this year. This is because the new securitization changes have made the prospect of issuing less attractive for more credit card providers.
ABS securities has been leading the securities front for years now. However, in the current year, of the total $37 billion worth ABS securities that has been sold, only a meager $2.9 billion accounts for the issuance of credit card securities.
There have been two aspects that have led to this. A tougher legislative and regulatory environment, coupled with tougher rules and strict standards for lending, has led to the clamp on the credit card issuance in the current year.
Banks that were initially investing a lot in the issuance of credit cards are now looking for better pastures as compared to securitization. Some of the concepts they are considering are funding new loans to customers using their deposit base and unsecured debt market in the corporate sector.