Since de-linked issuance trusts radically changed the credit card sector three years ago, larger, more liquid tranches have led the card ABS to become increasingly corporate bond-like, with Citibank pricing a 12-year deal last year, aimed specifically at corporate investors. As the de-linked structure was adapted to the other major issuers in the sector, the next evolutionary step - medium-term notes - may also be born from the corporate market, said one banking pro.

Steve Etherington, first vice president at Bank One N.A., speaking theoretically, said that the next structural development might be the development of an MTN-like program within the master note trust structure. "I think there is a growing need for off-year bonds, placed in small amounts, for portfolio managers to add to their portfolios," said Etherington. "These would be single-investor negotiations," he added.

The gravitation towards sizeable, index-eligible bonds has led to fewer, larger offerings that are driven, initially, by reverse inquiry interest. "In this environment, you have to bring sizeable offerings, in order to offset the cost of rating and legal fees. MTNs, with a repeat issuance nature, offer the compressed documentation savings of the de-linked master trust," Etherington noted.

If adopted by credit card issuers, this would allow for the issuance of bonds structured to any maturity imaginable, as well as fixed-, floating- or even index-linked payments, suited to investor need.

Invented by General Motors Acceptance Corp. in the 1980s, MTNs enabled issuers to issue at a moment's notice, from a previously filed shelf, which allows for a specified amount of supply over a two-year period. The negotiated nature of the transaction allows investors to secure slightly higher yield, from much smaller - typically under $100 million - offerings.

MTNs gained favor in the 1990s, as issuers could tailor debt offerings to investor tenor and yield needs, and some issuers, such as GMAC and CMS Energy, set up direct-to-investor retail programs. These programs sell varying amounts of bonds to mom-and-pop investors on a weekly basis. Following the Russian debt crisis and Asian flu in the late 1990s, fixed-income investors favored the large liquid debt offerings.

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