Household International is rumored to be considering a private label credit-card securitization sometime this year, said a source familiar with the market.

Add to that the recent filings of issuers like Saks Credit Corp. and Circuit City Stores Inc., and it's no wonder analysts are calling for an active year in the retail card sector.

According to a report released by Moody's Investors Service, public issuance is expected to rise to $4 billion this year, from $2.3 billion in 1999.

"Every year our expectations have been slightly higher than the actual issuance," confessed Mark DiRienz, co-author of the report. "But either way the issuance has been rising since 1997."

Though unwilling to name specific companies, DiRienz explained that a lot of Moody's expectations last year had been in connection to new issuers who instead accessed the private market, or delayed their transactions.

"So we continue to have a number of them on the radar this year," said DiRienz. "One is sort of a carryover from last year who didn't do anything, and at least a couple should be first time issuers, with a high probability first time issuance in the public term arena."

Of potential new issuers, a spokesman for Associates First Capital said the company would consider financing its private label portfolio on the public market, following the debut of its bankcard line later this year.

Though officials at MBNA said they haven't planned an all-private label deal yet, the company has been seen building its portfolio over the past few months - adding names such as America Online, barnesandnoble.com and Bally's Fitness.

Evolution: Diversity within

Portfolios

The major difference between private label and bankcard portfolios has to do with the utility of the card, DiRienz explained.

If a retailer goes bankrupt, and there's a full liquidation, there's no more purchases on that card to support the transaction, which would trigger a declining pool. This is why credit enhancement levels are much higher on retail deals than bankcard deals, DiRienz said.

A notable development in the private label credit card sector is portfolio diversification, as seen in the consolidation of the Proffitt's and the Saks platforms.

"Retailers have been diversifying their pools, whether it be geographically, across merchandise platform, or credit spectrum, and it becomes less and less likely that the whole store or the whole network is going to collapse or go bankrupt," DiRienz said.

The Saks master trust is a newly-combined entity, the result of combining the original Proffitt's Master Trust, the Younkers Master Trust, into the Saks Master Trust.

So now the master trust covers not only a wider coast-to-coast geographic region, and a wider merchandise platform, but a wider a credit spectrum, ranging from the Mervyns borrower up to the high end Saks borrower.

"It becomes less and less likely that all those groups - all those platforms, all those geographic locations, all those credit spectrums - are going to make Saks go bankrupt," said DiRienz.

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