MBNA Bank Corp., the nation's largest credit card specialist, this week joins a growing group of American banks raising capital in Europe.
The Wilmington, Del.-based bank's debut European debt issue, underwritten by Merrill Lynch, is an asset-backed security valued at 1 billion to 1.25 billion German marks - $673 million to $842 million.
The five-year floating rate bonds will be priced over the three-month London interbank offered rate. Citicorp recently paid nine basis points over Libor for a credit card-backed issue.
The European markets have become popular among American banks that want to expand and diversify their sources of funding, said Michael Leit, an analyst at Prudential Securities. European investors are attracted by the relatively high return on American banks' debt.
Citicorp and BankAmerica have been active in the Eurobond market for the last few years, and NationsBank Corp. began issuing debt in Europe late last year. On Monday, BankAmerica announced it was issuing another $500 million in floating-rate Eurobonds due in 2001.
But MBNA differs from many other banks because it relies almost exclusively on credit cards for its business. Of the bank's $30 billion in managed assets, $26.7 billion are credit card receivables, said Mark Girolamo, an analyst at Bear, Stearns & Co.
MBNA has more than tripled its managed loan assets since 1991, said Mr. Girolamo, with much of the growth attributable to affinity programs in which it markets cards to members of professional associations, university alumni groups, and other organizations that command strong consumer loyalty.
The company recently extended its affinity card business to the United Kingdom. Selling debt to raise cash and expand business there "would be a natural thing," said Tony Smith, an analyst with Donaldson, Lufkin and Jenrette Securities Inc. MBNA had no comment.
"MBNA has grown to be a sizable player," said Mr. Leit. "This offering is a testament to their strength."
