As the market awaits Citigroup Inc.'s inaugural C-piece credit-card transaction - rumored to be presently in the works - C-piece technology continues to develop.
Most recently, Credit Suisse First Boston issued a report on how recent improvements in liquidity may help to add value to credit card C-pieces or triple-B credit card tranches.
Mentioned were the new structural advances in credit card technology that have been helping to alleviate liquidity issues regarding credit card C-pieces.
"Large bank-card issuers are looking at new structural technology that would allow them to decouple the maturity and sizes of the C-piece issuance from the B's and the A's," said Neil McPherson, head of ABS research at CSFB. "Some people are very skittish about buying a tranche. The bigger the deal the more the liquidity because you have more holders. So if you could issue C-pieces in one big chunk, you probably could get more people to play because it would be a benchmark issuance of C-pieces and it might attract some cross-over buyers, like corporate-type buyers."
The report also addresses how marginal increases in asset-backed collateralized debt obligations (CDOs) should contribute to increased liquidity for triple-B rated pieces. The report further states that CDOs are gaining popularity as a vehicle that allows mainly buy-and-hold investors to fund their subordinate portfolios, as well as money managers to expand their assets under management.
"Asset-backed CBOs should look to add some increased credit card exposure to increase the diversity scores," McPherson said.
The explosive growth seen in asset-backed commercial paper (ABCP) securities arbitrage vehicles is also expected to come to the aid of credit-card C-pieces in terms of liquidity issues. More recently, many securities arbitrage programs have been the recent purchasers of credit card C-pieces, the report stated.
