Federated Department Stores will bring a private-label credit card portfolio to market as soon as this week, sources said. Though unconfirmed, it's rumored that Credit Suisse First Boston will be lead manager on the deal.
Federated declined to comment, but according to published reports, via Federated's Prime Credit Card Mast Trust, the company can issue as much as $1 billion in class-A and class-B asset-backed certificates.
However, a source familiar with the transaction said the deal probably will not exceed $500 million.
If completed this quarter, Federated's deal will be the eighth private-label card deal brought to the market this year, compared to five deals in 1999, according to Thomson Financial Securities Data.
So far this year - including Circuit City's $275 million deal, which closed last week - there has been approximately $3.8 billion in private-label issuance, $1.6 billion more than private label issuance in 1999.
"Whether Sears is active or not has a huge impact in the ultimate issuance of retail cards [each year]," noted Mark DiRienz, a vice president at Moody's Investors Service.
Sears, Roebuck & Co. has issued $2.6 billion so far this year, compared to $1.3 billion in 1999, according to TFSD. However, minus the Sears deals, there has still been $1.8 billion in issuance, compared to just $1 billion in non-Sears retail issuance in 1999.
In addition to Federated's deal, Spiegel Inc. is still working on a transaction, sources said. In all, by year-end private-label credit card issuance should exceed $4 billion.
"There's another $500 million in the hopper that we know is going close within the next couple of weeks, and who knows what will happen in December," DiRienz said.
In a report back in January, Moody's predicted $4 billion in private-label issuance for the year.
Federated Minus Fingerhut
Federated has not issued a term deal since 1996, although the company has been funding its numerous card accounts through variable funding commercial paper, according to a source.
The source noted that the Fingerhut portfolio - which recently suffered losses that negatively affected Federated's third quarter earnings - is not associated with the Prime portfolio. Securities backed by the Fingerhut portfolio are issued out of a separate master trust, the source said.
Prime is backed by accounts originated by subsidiaries such as Bloomingdale's, Macy's, Lazarus and Sterns.