Alliance Data Systems Corp. issued $950 million of fixed-rate term credit card-loan-backed securities to free up liquidity at the Dallas private-label credit card issuer, which recently has been hurt by currency changes and higher loss rates.
The securities consist of three series with an average maturity of just under three years and an average interest rate of just under 4%. About $750 million of the notes are rated triple-A and eligible for financing through the Federal Reserve's Term Asset-Backed Securities Loan Facility program.
Talf, launched in March, offers investors loans at attractive rates to buy newly created asset-backed securities. Most of the consumer loan-backed bond deals sold this year were eligible for Talf, which helped revitalize the securitization market and improved the availability of credit for consumers.
The remaining $200 million of investment-grade securities sold by Alliance Data will be retained by it and financed through certificates of deposit that are covered by the Federal Deposit Insurance Corp.
Ed Heffernan, Alliance Data's president and chief executive, said in a press release Friday that "accessing the term markets frees up additional excess liquidity."
This supports efforts to "augment" its credit card business, he said.
Friday's offering and a $709 million issue in April brings the company's term fixed-rate asset-backed issuance to $1.7 billion. It also has $1.2 billion in term fixed-rate bonds outstanding, leaving its private-label credit card portfolio with two-thirds of its funding through securitization.