The Metris Companies returns to the ABS primary market this week with a $200 million, three-year MBIA-wrapped series 2004-1, led by Banc of America Securities and Deutsche Bank Securities. This is another positive step for the issuer following recent defeasement of outstanding transactions and public backing from MBIA in its efforts to access the capital markets.

Most expect MMT 2004-1 to go quickly - within two days of formal introduction - due to the MBIA wrap, as well as its relatively small size. The six MMT offerings since 2001 have averaged $691 million in size. An increase in size is unlikely, sources said, as "Metris doesn't have the collateral to support a larger deal."

Sources close to the transaction speculated Metris would price in the mid-to-high 20 basis point area over one-month Libor. This would represent a yield pickup versus the recent three-year deal from Providian Financial, which priced $750 million of three-year senior/subordinated series 2004-A notes in late March at 23 basis points over one-month Libor.

The last time Metris completed a term credit card securitization was May 2002, when it sold $900 million of three-year and $600 million of five-year paper via Banc of America, Deutsche Bank and JPMorgan Securities. Since then, the company had come under the scrutiny of bank regulators and saw its access to liquidity - insured deposits, unsecured debt and ABS - restricted.

2004 is viewed as a pivotal year for Metris, which sports a triple-C unsecured debt rating and has numerous ABS and debt maturities coming due in 2004, including a $100 million 10% coupon unsecured obligation in November, which becomes callable at 102.5 in May.

As it has worked through its well-documented difficulties, Metris has had few true disciples. Sellside researchers at Information Management Network's ABS East gathering in October 2002 went to great lengths to explain their bearish stance, while the session facilitator, AIG portfolio manager Anatoly Burman, defended the issuer (see ASR 10/7/02).

Metris did not help its situation by skipping the conference, prompting JPMorgan researcher Chris Flanagan to say: "Metris claims to have a good story to tell; they have to get out and tell it."

Metris did just that, hitting the road with new CEO David Wesselink and Treasurer Scott Fjellman. "Metris showed me that they have very bright management, and their working closely with Deutsche Bank instilled confidence," one investor said. "They stuck to the plan, sold charged-off and 90-plus day delinquent accounts, and it has paid off in the performance of the trust."

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