In the wake of credit enhancement reductions to one of Chase Manhattan Bank, N.A.'s credit card trusts, analysts with Citigroup Global Markets are predicting other credit card issuers are likely to seek similar reductions soon. "Given that one issuer has had its credit enhancement reduced, others are likely to pursue a request for credit enhancement reduction," said Citigroup analyst Mary Kane.

Credit enhancement levels for Chase's CHAIT trust class A notes were reduced to 13.5% from 14.5% and to 6.75% from 7.5% for the class B notes. Until the cut, Chase's enhancement levels had been somewhat high compared to other comparable quality trusts. The cut now brings Chase's class A notes more in-line with other major credit card issuers such as Bank of America, N.A., also with 13.5% senior enhancement. Banks such as Discover Bank and National City Bank each have 12.5% credit enhancement for their class A notes, with Citibank Credit Card Issuance Trust at 12.25% and Household Affinity (HSBC Bank) at 10% for the A class.

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