The acquisition of monoline credit card issuer MBNA Corp. by banking mammoth Bank of America likely means MBNA credit card ABS issuance volume will decline significantly, pulling precious volume out of an already floundering sector, sources say. Last Thursday, Charlotte, N.C.-based BofA announced it would acquire MBNA for $35 billion in cash and stock.
MBNA currently has about $80 billion in credit card receivables with roughly $70 billion of that financed through securitization. BofA, while a highly capitalized commercial bank with its own portfolio of credit card receivables, has not issued a credit card deal since 2001, leading many to believe that MBNA's days as a prolific issuer of ABS are over. While it is unlikely that MBNA will completely disappear from the ABS market, sources say it is almost certain to issue less credit card ABS as it will have ample access to funds through its new parent. BofA also carries a higher corporate debt rating, at double-A minus, than MBNA at triple-B-plus.