NEW YORK — Citigroup is expected to announce a second offering of credit card-backed securities through Talf.
The $4 billion deal, dubbed Citi Omni 2009-A8, will be offered by the bank itself, which is the sole bookrunner.
The entire deal has a triple-A rating with an initial price guidance of 210 basis points over the benchmark Libor.
With this, the total tally of deals in the market ahead of Tuesday's deadline for cheap funding from the Federal Reserve Bank is $13.107 billion.
Over the past couple of days, there's been a rash of deals eligible under the Fed's Term Asset-Backed Securities Loan Facility, or TALF, which allows investors to use these securities as collateral to get funding. The program is aimed at restarting consumer lending and bids in the fourth round are due Tuesday by 3 p.m. EDT. Loans will come with three-year and five-year maturities.
The Fed will apply so-called "haircuts" - cuts in the value of the collateral backing the loans - ranging from 5%-9%, depending on the average life of the securities, for lease-backed securities. The Citi deal comes with a 8% haircut.
As the program picks up steam it's been able to draw both traditional and new investors to the asset-backed securities market, participants said.
In the past few months, spreads have tightened on these bonds with a triple-A rated credit card security quoted at 200 basis points as of mid-May versus 375 basis points before the launch of TALF, according to data from Barclays Capital.
Further, in the new issue market, prices on TALF-eligible issues have tightened with each round.
For instance, the first Citi credit-card transaction was sold at 175 basis points over one-month Libor, while the Chase deal from the last round priced at 155 basis points over one-month Libor. This time, the American Express transaction has a price talk in the area of 140 basis points over the benchmark.