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Card ABS nears 2000 supply

With four-and-a-half months remaining in 2001, total credit card issuance this year is on par with total issuance volume seen all of last year, market sources noted. Through August 10, total supply in the credit card sector equals $47.9 billion versus $48.1 billion for all of 2000, according to Barclays Capital consumer ABS analyst Juliet Jones. Thomson Financial numbers show a slightly larger gap.

Leading this deluge of supply are the benchmark issuers in the sector, some of which have already surpassed last year's levels, in addition to numerous issuers returning to the market after not issuing all of last year.

The top issuer so far this year is Citibank with $7.2 billion or 15% of the total, up from $6.8 billion in all of 2000. In a virtual tie for second place, Discover and MBNA have each issued approximately $5.3 billion of supply - each roughly 11% of the yearly total.

As for re-entrants to the market this year, Bank of America, First USA and World Financial Network have all priced sizeable offerings after long absences from the credit card sector. Off-the-run names such as Saks Inc., First Premier and First Bankcard have all brought deals as well, after a one-year hiatus from the market in 2000.

Looking at the ABS market as a whole, Merrill Lynch analyst Dan Castro notes that despite increased issuance across most asset classes, the credit card sector has seen the greatest increase in supply, accounting for 26% of total ABS issuance this year, up from 22.5% in 2000. "Credit cards make up a bigger share of an even bigger (ABS) market," Castro said. Castro credits the added supply to the old issuers coming back to the market as well as newly created issuance vehicles that allow issuers easier access to the markets. Also, some issuers have expanded into new areas of the credit card sector.

For example, Household Finance and Conseco Inc. have each brought new private-label credit card trusts to market. And the new master-note trusts of Citibank and MBNA have allowed them to take advantage of low interest rates as well as tailor structures to investor demand.

"With the new trusts of Citibank and now MBNA, we see them able to time the market better and act opportunistically to bring larger pieces to market," Castro added.

Going forward, these trends should continue; issuers such as Associates Capital, Circuit City and Cross Country Bank have yet to tap the market this year, Castro said, and both Citibank and MBNA will continue to bring large deals to investors.

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