Chase Manhattan Bank N.A. announced last week that it had received majority bondholder approval to amend its credit card master trust. This allows the sharing of excess spread, therefore limiting the early payout risk for three high-coupon, fixed-rate series. While raising questions as to its overall effectiveness (see ASR 5/26/03), the move is viewed as an example of an issuer protecting bondholder interests, without raising regulatory suspicions of implicit recourse and whether or not the assets truly are off-balance sheet.
As of 5 p.m. last Wednesday, when the solicitation period ended, the issuer had received consent from 64.7% of 1996-3 holders, 82.2% of 1996-2 holders and 69.7% of 1999-3 holders. Chase had only needed 50% consent from holders of notes in each trust. The final step to allow trust-wide sharing of excess spread is for rating agencies Fitch Ratings, Moody's Investors Service and Standard & Poor's Corp. to send confirmation letters to the issuer, "that adoption of the proposed amendments will not result in a reduction or withdrawal of the respective ratings for each of the three series," according to JPMorgan Securities researchers.