With the stated purpose of taking damaged and inexperienced borrowers along the path to attaining prime status, bankcard provider Providian Financial's fourth and fifth offerings from its "Gateway to Credit" program have been blowouts, markets sources said.
The company has gained global acceptance for paper backed by receivables from the program.
The $550 million series 2001-C three-year and $650 million series 2001-D seven-year floating-rate paper were increased from initial sizes of $500 million each and still priced at the tight end of price guidance.
The three-year triple-A rated class priced at par with a coupon of one-month Libor plus 23 basis points and the seven-year class, also rated triple-A, priced at par with a coupon of one-month Libor plus 37 basis points.
Sources familiar with the offering said both classes were "heavily oversubscribed," crediting the success to Providian's efforts marketing the program, which was introduced just last September.
"Any new vehicle needs to be seen in the primary market more than once in order to gain familiarity," said one source. "I credit the success of these offerings to Providian's ability to market themselves and the program, particularly in Europe."
Also credited was Providian's decision to guarantee both single-tranche offerings with an AMBAC surety wrap, as opposed to one from MBIA. "An AMBAC wrap has a wider appeal than MBIA, to a number of accounts, especially in Europe where investors look to reduce exposure to MBIA," it was added.
Demand for the 2001-C three-year offering was strongest in the U.S., where investors favor short-term floaters while the seven-year 2001-D saw stronger European demand as investors favor higher yields.