The Royal Bank of Scotland (RBS) last week launched the largest ever credit card securitization from a European originator. The $1.6 billion securitization issue, backed by Visa and MasterCard receivables, was co-managed by RBS and Salomon Smith Barney.

The transaction was split into two separate floating rate deals - Arran One Series 00-A and 00-B. The 00-A deal, worth $600 million, was split into three tranches with an expected maturity of three years. The $1 billion 00-B issue, also split into three tranches, has a longer maturity of five years.

Pricing for the $525 million A tranche on the 00-A issue, rated Aaa/AAA by Moody's Investors Service and Fitch IBCA, was 14 basis points over three-month Libor. The spread on the $36 million B class notes, rated Aa3/A, was 34 over, and the $39 million C tranche, rated Baa1/BBB, was 85 over.

Pricing was a little wider on the longer-term 00-B series. The triple-A $875 million senior tranche priced at 19 over three-month Libor. The spread on the $60 million B notes, rated A3/A, was 39 over, and the $65 million Baa1/BBB rated C tranche came in at 90 over.

A source close to the deal was pleased with the pricing. "RBS is a first time issuer so there was a bit of price discovery to do," he said. "Pricing started wider to get people interested, but the deal was oversubscribed so the pricing tightened in as a result."

The source explained the deal was denominated in dollars to increase its distribution. He added that it had sold well in both the U.S. and Europe.

The deal was also structured to attract a wider investor base. "Because it was such a large transaction, we wanted to have a spread of investors," he said. "This was done to attract both money market funds and longer dated investors."

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