Barclays Bank Delaware's (BBD) trust will issue the first credit card securitization that will fall under the Federal Deposit Insurance Corp.'s (FDIC) new Safe Harbor rule, Moody's Investors Service analysts said in yesterday's Credit Card Statement report. The agency adopted the rule on September 27, 2010.

BBD has created the first new publicly registered credit card trust in several years. On June 13, the company filed an S-3 with the Securities and Exchange Commission to establish its Dryrock Issuance Trust, where BBD will serve as both originator and servicer of the credit card receivables that will back the trust.

The portfolio comprises VISA, MasterCard and American Express accounts that were originated by the bank.

In a July 6 report, TCW said it viewed the filing as a positive for the credit card sector given that it has been shrinking lately.

The FDIC’s new Safe Harbor rule isolates the trust’s assets from those of the sponsoring bank upon a bank's receivership.

It does not require card trusts to comply with the pre-September 2009 accounting standards or FAS 140. Thus it allows issuers more flexibility to amend the trust documentation and collateral pool compared to the grandfathered rule.

By contrast, under the grandfathered rule, the sponsor cannot alter the trust in a way that would violate FAS 140 if the sponsor wants to preserve the isolation of the trust’s assets in the event of the bank’s receivership.

Moody's said that unlike credit card offerings, auto loan ABS deals that employ a different trust structure cannot be grandfathered under the old rule. Thus the sector's issuers have been complying with the new Safe Harbor rule for over a year and a half now.


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