Citibank (Dakota) N.A. wants to buy $4.84 billion worth of the Class A notes issued by the Citibank Credit Card Issuance Trust (CCCIT).

This is part of the firm's efforts to improve the company's debt profile, as related documents indicate and as reported by Bank of America Merrill Lynch analysts.

"We believe Citibank remains committed to the bank's Citi-Branded credit card operations," analysts wrote in a report released yesterday.

Considering the purchase offer, until the time the bank finds meaningful growth in the related card portfolio, BofA Merrill analysts doubt that the trust will be issuing a new series of notes. The bank might even look to buy more series at this point, even though the company had said that they stay committed to the ABS market.

The bank, analysts believe, is less likely to buy notes utilizing either fixed-rate and/or currency swap since the termination of the swap might go against the safe harbor rules.

It also probably will not make purchases using subordinated notes since purchased subordinated notes might need to be replaced to maintain the required subordination amount or utilizing notes issued by COMNI considering that the comparatively high dollar price and Term ABS Loan Facility designation, analysts said.

The offer's (for the Class A notes) purchase price, which includes the early tender premium and accrued interest, can result in spread levels that are below those before the offer was announced, according to BofA Merrill analysts.

"We believe most, if not all, of the notes designated under the Any and All offer will be tendered and, as a result, only a portion of the notes designated under the Partial Waterfall Tender Offer will be accepted for purchase," analysts wrote.

This is why analysts are not anticipating tighter spread levels on Class A notes that the bank has designated with one of the lower acceptance priority levels (3-6).

Analysts cited the bank's offer in 2005 to buy all the notes issued by Citibank Omni-S Master Trust, which was previously Sears Credit Account Master Trust II. This offer, they said, actually failed to result in all notes being tendered. The average offer price was $101.16, analysts also noted. 

They added that CCCIT has already issued and has outstanding close to $36.9 billion Class A notes that are supported by 16% subordination, $2.4 billion of Class B notes (11.0%) and $3.5 billion of Class C notes (4.25% plus reserve account), which all total $42.8 billion.

The collateral certificate equaled $1.9 billion at the end of April. About $6.2 billion of notes are scheduled to mature over this year, analysts noted. Most of these notes that are part of the purchase offer are scheduled to mature after 2011, BofA Merrill analysts noted.

Meanwhile, around $62.2 billion of credit card receivables have been transferred to the master trust supporting the CCCIT, they stated.

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