MBNA, Citibank Said to Plan Credit Card-Backed Securities Issues Denominated in Marks

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In a bid to expand the investor base for credit card-backed securities, MBNA Corp. and Citibank are reportedly preparing separate offerings denominated in German marks for sale this month .

The proposed offerings by two of the biggest issuers in the asset-backed securities market could give other issuers a new investor source to help absorb new issues following a record level of offerings during the first quarter.

The total volume of $26.2 billion during the quarter was more than 25% ahead of the volume reported in the same quarter a year ago, according to Asset Sales Report. And despite a lull in offerings following the quarter end flurry, issuance is expected to pick up again in mid-April on the way to what analysts expect will be a record $130 billion for the year.

But the rising volume could cause higher borrowing costs for issuers if investor demand does not keep up with supply.

The large first quarter volume pushed spreads over treasury yields on fixed rate maturities only slightly wider, according to Dan Castro, the chief asset-backed securities analyst at Merrill Lynch & Co. But spreads on medium or longer-term securities could widen should supply rise quickly, he warns.

Neither MBNA or Citibank would comment on the offerings. But Vernon Wright, vice chairman of MBNA America Bank, said deals denominated in foreign currencies make sense for issuers and investors alike.

"There are a lot of fund managers and institutional investors in the European market who currently invest in dollar-denominated asset-backed securities," he said. …