ABN AMRO has won a mandate from major retailer David Jones to securitize the company's A$230 million ($150 million) credit-card portfolio. The transaction will be managed by the investment bank's special purpose vehicle, Tasman Holdings Pty Ltd, and funded in the U.S. or Australian commercial paper markets according to pricing opportunities.

Tasman, which is rated A-1+ by Standard & Poor's, has about A$2.5 billion of assets under management and the equivalent of A$1.5 billion of CP on issue through its two financing arms, Abel Funding Pty Ltd (in Australia) and Tasman Funding Inc. (in the U.S.). The first transaction is expected to be in June and is likely to be in the U.S. market, which has seen CP issues trading between 2 and 5 basis points lower than the Australian market for most of this year.

ABN AMRO was said to have won against stiff opposition from "11 or 12" banks, including SG Australia and Bankers Trust Australia, who arranged a similar deal for David Jones in 1991. The original transaction for which SG arranged the funding and BT provided the management (through its Securitised Asset Funding Entity vehicle) was the first of its kind in Australia and was credit-wrapped by a monoline insurer. This created a number of restrictions for the retailer, which was frequently obliged to seek approval from the program managers for relatively small changes to the way it managed its credit card marketing. The arrangement was later cancelled when David Jones then part of the Adelaide Steamship listed on the Australian Stock Exchange.

The retailer was said to have chosen Tasman as much for its credit enhancement arrangements as price. The program is said to maintain over-collateralisation of around 10% across its asset base, which includes BMW Australia auto loans and trade receivables. This gives David Jones much greater flexibility: virtually the only time it needs to consult with ABN AMRO is when it proposes to cut the interest rate on the credit card.

- Roger Hogan

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