Hanover Readies Card-Backed Deal
Manufacturers Hanover's long-awaited foray into the asset-backed market is finally about to happen.
For months, the New York bank's offering has been rumored to be imminent. But now, it appears, the bank is finally gearing up to issue $750 million in three-year securities backed by credit card receivables, probably by the end of July.
Manufacturers Hanover Securities Corp. will be lead manager of the offering, and at least half a dozen investment banks will co-manage the deal.
Card-Backed Issue Maturing
Hanover issued $475 million in securities backed by credit card receivables in 1988, but those are maturing now. The bank began making principal payments on that deal last July.
Several factors delayed the offering. Hanover changed to a new structure for the deal, using a master trust to hold collateral for the securities months after first indicating plans to issue the securities.
In addition, the market for credit-card-backed securities has been jarred recently by rising delinquency rates on credit card receivables, making new offerings tricky.
Citicorp announced Wednesday that rising consumer defaults in June eroded credit cushions on 17 of its credit-card-backed deals.
Earlier this year, Chevy Chase Savings Bank began contacting holders of its card-backed securities to see if they wanted the bank to begin paying them off early because delinquency rates on the credit card accounts had gotten so high.