On active trading last week, spreads for Sears Roebuck & Co. credit card ABS tightened 10 to 20 basis points on the news that its operations would be purchased by Citigroup. Boosting momentum was the news that, in addition to the portfolio sale, Sears had successfully established a strategic alliance with Citi, which the market saw as creating competitive synergies for the largest credit card issuer in the U.S.
Sears Credit Account Master Trust 2002-4, with roughly two years of tenor remaining, tightened to a reported eight basis points over one-month Libor, from pre-announcement levels in the 20 to 22 basis point area. The bonds moved from a slight discount to a premium, tightening through the 13 basis point coupon over Libor. Analysts expect the deals to eventually move in line with Citibank ABS, the richest in the credit card arena. Citi's ABS remained unchanged on the news.