The first bond backed by credit card collateral from continental Europe could be launched this year. Rating agency officials in London say they are receiving inquiries from potential issuers but decline to provide further details of any pending transactions. Spain seems the most likely jurisdiction based on its credit card usage, which is Europe's second highest after the U.K. Potential issuers include local banks as well as U.K. lenders such as Barclays Bank or U.S. issuers like MBNA, which have been developing their operations in Spain.
The credit card-backed market in the U.S. is highly developed, with $53 billion of ABS issued last year, and the U.K.'s is well-established, generating over €10 billion in credit card securitizations last year. But continental Europeans are more likely to use debit cards or bank overdrafts and no large pools of assets have been securitized on the Continent. Spain has the largest annual credit card spending in Europe at about €70 billion, according to data from Visa and Mastercard, although it is still less than half that in the U.K. which saw about €210 billion in 2004.
A spokesman for Barclays said it would not rule out such a transaction, but noted its Spanish business is less than a tenth the size of its U.K. business, and a spokesman at MBNA was unable to contact appropriate officials at the lender for comment by press time.
Any sales would come as credit card originators appear to be intensifying their focus on the Continent as competition in the U.K. heats up. The sharp growth of credit cards in the U.K. coincided with U.S. originators such as MBNA moving into the market, followed by HFC and Capital One who aggressively pursued potential new cardholders to build up market share. MBNA was the first to issue a U.K. credit card transaction, CARDS I, in 1995, and about eight master trusts have been set up since by the major originators. Aside from the U.S. firms, local originators such as Barclaycard and Royal Bank of Scotland have established a strong presence, along with retail outlets like Sainsbury's and internet originators like Egg.
