Citigroup Global Markets commenced a cash tender offer for certificates issued by Citibank Omni-S Master Trust, formerly Sears Credit Account Master Trust II, for $4.2 billion of certificates outstanding, according to data from Merrill Lynch.

"We believe the offered prices should ensure a successful tender," wrote Theresa O'Neill, ABS strategist with Merrill Lynch. As part of the offer, which has some classes bid at $1,040 per every $1,000, investors could receive 0.5 to 1 point more than they would have received in a regular transaction. O'Neill noted the levels are particularly attractive for a private label portfolio, since they tend to trade at a concession to bank card portfolios.

The transaction is one of a string of private label credit card portfolio acquisitions by Citigroup, including those of Federated Department Stores, Sears Roebuck & Co., and Home Depot. The bank's $25.3 billion private-label credit card portfolio accounts for 26% of North America Card's Managed Net Revenue, according to Merrill Lynch.

The credit card sector has been extremely active in terms of portfolio and business acquisitions, with the likes of MBNA Corp., The Metris Companies, Providian Financial Corp. being acquired in recent months. Portfolios from Federated Department Stores, Saks Inc., The Home Depot, Inc., Sears, Circuit City Stores, Inc., Sunoco, Inc., Mervyn's LLC and Dillards, Inc. have been acquired by third-party specialists. The consolidation trend in both retail and private label credit card markets is widely expected to diminish credit card volume in the future.

(c) 2005 Asset Securitization Report and SourceMedia, Inc. All Rights Reserved.

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