Banc One Corp. issued $1.22 billion of student loan asset-backed securities Thursday, with roughly one-third of the sale purchased by international investors.
The securities were underwritten in three parts by CS First Boston Inc. and sold through a special purpose vehicle.
Banc One's recent agreement with British Petroleum to issue a cobranded credit card will generate a large amount of receipt receivables. This created the need for liquidity at the bank, said Dick D. Lodge, president of Banc One Fund Management Co.
With the student loan asset-back issuance, the bank can make room for the bulk of receivables set to flow into the bank, he explained. Also, he said, the student loan market is in flux because of the federal government's plans to change the system. As a result, student loans are trading at a high premium.
The high degree of international interest in the deal reflected the growing foreign desire for floating U.S. asset-backed securities, said Scott J. Ulm, a managing director with CS First Boston.
Orders for the Banc One debt came in from as far away as Australia, he said. The debt is high quality, offers healthy spreads, and is far more attractive than the alternatives, generally treasuries, he added.