DOW JONES NEWSWIRES
Alliance Data Systems Corp. (ADS) issued $950 million of
fixed-rate term credit-card-loan backed securities to free up
liquidity at the company, 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 AAA and
eligible under the U.S. government's Term Asset-Backed Securities
Loan Facility program.
The Federal Reserve's TALF program, launched in March, offers
investors loans at attractive rates to buy newly created
asset-backed securities. Most of the consumer loan-backed 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 ADS will be retained by the company and financed through Federal
Deposit Insurance Corp.-insured certificates of deposit.
President and Chief Executive Ed Heffernan said "accessing the
term markets frees-up additional excess liquidity form our other
sources of funding." This supports efforts to "augment" its
credit-card unit business, he said.
Friday's offering and a $709 million issue unveiled in April
brings the company's term fixed-rate ABS issuance to $1.7 billion.
The company also has $1.2 billion in term fixed-rate bonds
outstanding, leaving ADS' private-label credit-card portfolio with
two-thirds of its funding through ABS.
Shares closed at $59.77 on Thursday and didn't trade premarket.
The stock is down 10% over the past year, though it has more than
doubled since March.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com
