Review 2006: Asset-Backed Securities Market Defied Predictions

By Jalili, H. Michael | American Banker, January 23, 2007 | Go to article overview

Review 2006: Asset-Backed Securities Market Defied Predictions


Jalili, H. Michael, American Banker


Many had expected the near extinction of credit card monolines, caused by a wave of acquisitions in 2005, to lead to a decline in issuance of credit card asset-backed securities and possibly make them irrelevant.

After all, companies like MBNA Corp., Providian Financial Corp., and Metris Cos. Inc., which lacked retail deposit-gathering networks, relied on the asset-backed market to raise funds for credit card lending. The same could not be said about the large banking companies that bought them.

Yet credit card securitization volume either fell only slightly or actually increased last year, depending on whose numbers you use.

Figures compiled by the weekly newsletter Asset Backed Alert show that U.S. issuance of credit card asset-backed securities rose more than 16% last year, to about $78.3 billion. According to Thomson Corp., U.S. credit card bond issuance slipped just 1.5%, to $67 billion.

Cynthia Ullrich, a director of research at Fitch Inc., said that in the first 11 months of the year banks had issued $60.4 billion of credit card asset-backed securities in the United States. For all of 2005, Fitch tracked a total of $56.5 billion of such credit card issues.

"Initially, we thought that the acquirers of the monolines wouldn't be active in the securitization of the market, but in fact they've been very active," Ms. Ullrich said.

Analysts said the biggest reason for this surprising trend is that pricing for the securities was highly favorable.

"Credit card ABS spreads continued to grind tighter through 2006," said Jeff Salmon, an analyst with Mellon Financial Corp. "Issuers were getting very attractive funding costs by doing asset-backed securities, and that was the key catalyst."

Bank of America Corp., which bought MBNA on Jan. 1 of last year, was the most active in the sector, issuing almost $19.9 billion during the year, according to figures supplied by Asset Backed Alert. In 2005, MBNA ranked second, with almost $10 billion, Thomson Corp. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Review 2006: Asset-Backed Securities Market Defied Predictions
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.