Hoping to align its asset-backed commercial paper programs for anticipated growth in the global market for asset-backed commercial paper, JPMorgan Chase is making several changes to its conduit programs.
One strategy involves transferring assets from Preferred Receivables Funding Co. (PREFCO) into two other programs, Chariot Funding and Park Avenue Receivables Co. (PARCO) which will allow it to expand its capacity for larger non-dollar denominated assets within JPMorgan's conduits, according to the firm. After Preferred Receivables Funding's assets are transferred in November, the bank will shut down the program. Its Jupiter Securitization Co., a multiseller program that the bank launched in August 1990, is not allowed to have more than one-third of its assets come from overseas. That program was getting close to overflowing its allotted capacity of non-U.S. assets, said Deborah Toennies, a managing director at JPMorgan Securities, who oversees its conduit management and business development group.
While JPMorgan is not targeting any specific overseas region for growth in its conduit programs, Toennies notes that, "the average size of a European transaction continues to grow."
Using Chariot Funding as a repository for PREFCO's assets made the most sense, Toennies said, because the program has an unlimited capacity to do business outside of the U.S. At the moment, about half of Chariot's assets come from outside the U.S., and the company is seeing more interest among non-U.S. entities that are choosing to fund themselves using ABCP, she added. The reshuffling also brings JPMorgan closer to amalgamating its niched method to running ABCP programs with the broader approach taken by Bank One, which it acquired in July 2004.
Aside from Chariot, Jupiter, PARCO and PREFCO, JPMorgan is administrator of two other ABCP programs: Falcon Asset Securitization Co. and Ivory Funding Corp.
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