In the wake of uniquely structured credit-card deals that have hit the market this month (recall Citibank's all sub transaction), last week Providian Financial Corp. sold $1.2 billion of card receivables into the Rule 144A market, via its new Gateway Master Trust.
Interestingly, MBIA provided an innovative wrap on both series offered by Providian, essentially removing extension risk from the transactions. MBIA guaranteed payment of principal would be no later than the expected payment date.
This structural enhancement was also used on CompuCredit Corp.'s card deal that priced in late August, also placed in the Rule 144A market, according to market sources.
The Gateway portfolio is made up of loans to non-prime borrowers, with little or no credit histories, such as borrows new to the country. In this way the collateral is different than in standard non-prime credit card deals, usually associated with subprime borrowers, or borrowers with tainted credit histories.
The portfolio was sold as two separate deals: Providian Master Trust 2000-B and Providian Master Trust 2000-C, both transactions structured as soft bullets.
The $625 million, five-year A class (2000-B) priced at one-month Libor plus 28 basis points, while the $575 million, three-year A class (2000-C) priced at one-month Libor plus 22 basis points, according to market sources.
It's said that the class B notes on both transactions were retained by the issuer.
Deutsche Bank was lead underwriter on the deal, with Credit Suisse First Boston and Societe Generale as co-managers.