Lan Chile, the country’s largest domestic and international airline, has raised US$40 million through the securitization of future credit card ticket sales in the United States. This operation follows LanChile’s first securitization for US$60 million completed in 1999. The certificates have a fixed-rate coupon with a final maturity of seven years and a four-year principal grace period. The transaction, coordinated by Merrill Lynch, priced at a coupon of 6.96% and was sold to three major North American institutional investors. Fitch rated the receivables BBB- based on the Company’s strong market position, its financial profile and its ability to adjust capacity and operating expenses in order to maintain profitability.
Kuala Lumpur-based Iris Corp Bhd has signed a deal to provide 500,000 smart cards to Indonesia. The cards will be used for identification purposes, becoming the forerunner of the “Asean Travel Card”, which involves the management of travellers and workers within the 11-nation Asean region. The company estimates the market size for the Indonesian smart card is about 50 million. Earlier this year, Iris Corp signed an agreement with Indonesia for a pilot project for electronic passports similar to the “MEP” for Myanmar.
The first fully FCRA-compliant daily cross-sell campaign capability that enables lenders to identify and respond quickly to credit active customers in their portfolios has been launched by Experian. “Cross-Sell Triggers” enables users to identify credit-related activity initiated by their customers on a daily basis then respond by sending firm offers of credit within just 24 hours of notification. Key features include the use of daily inquiry and trade triggers coupled with credit scoring models and attributes to identify highly responsive, credit-active customers seeking additional credit products. The solution also includes running all triggered consumers through Experian’s “Do Not Solicit” database to ensure appropriate consumers receive offers of credit. “Cross-Sell Triggers” has the additional capability of running multiple campaigns simultaneously. Last week, Experian introduced “Email Presecreen,” a new service which will enable credit card issuers to fine tune email solicitations based on credit risk. (CF Library 8/23/02)
Canadian credit card receivable balances have slowed from a growth rate of 17% in 2001 to about 6% this year. However, charge-offs and delinquency rates in Canada are only half those in the USA,
although losses have increased to just over a 3% annualized rate from lows under 2% two and a half years ago. The findings are based on Moody’s Investors Service’s new “Canadian Credit Card Index” which tracks both securitized and non-securitized receivables. Moody’s says the Canadian credit-card market has grown rapidly in both charge volume and receivables. The volume of annual purchases and cash advances has risen to C$138 billion in 2001 from $84 billion in 1997 while outstanding balances nearly doubled over the same period to C$38.9 billion from C$20.5 billion; and there are now over 44 million cards in circulation in Canada.
Yields on Canadian portfolios have been relatively stable over the past three years, staying largely within a 13% – 14% (annualized) range. Since 1999, the net yield on the Canadian Index has averaged approximately 2.2% below the American level. That difference has narrowed substantially over the last nine months, however, with differences averaging only 1.2%.
NCO Portfolio Management, Inc., a leading purchaser and manager of delinquent accounts receivable, announced that it acquired the purchased accounts receivable portfolio of Great Lakes. NCO Group owns 63% of NCO Portfolio. NCO Group paid approximately $10.6 million for the net assets and related operations of Great Lakes, subject to certain adjustments. As part of the acquisition, NCO Group and GE Capital signed a multi -year agreement under which NCO Group will provide services to GE Capital. The transaction is expected to be slightly dilutive to earnings in the third quarter of 2002 and is expected to be accretive to the fourth quarter of 2002 and thereafter. NCO Portfolio paid $22.9 million for Great Lakes purchased accounts receivable portfolio. NCO Portfolio funded the purchase with $2.3 million of cash and $20.6 million of non -recourse financing provided by Cargill Financial Services Corporation. This non -recourse financing is collateral ized by the Great Lakes purchased accounts receivable portfolio. The transaction is expected to be accretive to NCO Portfolio’s 2002 earnings. Commenting on the transaction, Michael J. Barrist, Chairman and Chief Executive Officer of NCO Group and NCO Portfolio, stated, “The Great Lakes acquisition represents a great opportunity for both NCO Group and NCO
Portfolio. In addition to the near -term benefits of expanding our domestic receivables outsourcing business, NCO Group will benefit on a long -term basis from the opportunity to develop a strong ongoing business relationship with GE Capital. In addition, this represents the first step in NCO Portfolio’s strategy of purchasing larger more predictable portfolios at reasonable prices. This strategy will be ins trumental in NCO Portfolio’s success in an environment where higher prices on smaller portfolios have made those purchases less attractive. I am also pleased that we have entered into a new strategic financing arrangement with Cargill Financial Services Corporation, a leading financier of credit -intensive portfolio transactions.”
NCO Group, Inc. is the largest provider of accounts receivable collection services in the world. NCO Group provides services to clients in the financial services, healthcare, retail and commercial, utilities, education, telecommunications, and government sectors. NCO Portfolio Management, Inc. is a leading purchaser and manager of delinquent accounts receivable.
The Canadian government has ordered 750,000 “LaserCards” to-date from Drexler Technology to be used as Canada’s new “Permanent Resident Cards” for non-citizens. The $3.4 million optical memory card order came from a subcontract which provides for a minimum purchase of 2.3 million cards over the five-year term of the subcontract. The “LaserCard” order was placed through Information Spectrum, by the Canadian Bank Note Company, Limited, the Canadian government’s prime contractor for this program. As of December 31, 2003, the new card is a necessary document for every Permanent Resident reentering Canada by commercial carrier (airplane, boat, train and bus) after international travel.
Sub-prime credit card specialist, Metris Companies, launched the “TotalAdvantage Health” enhancement this morning. The program offers immediate discounts of up to 30% off doctor visits at more than 350,000 doctor offices; up to 50% off generic prescriptions and up to 13% off brand-name prescriptions at over 48,000 pharmacies; up to 60% off routine dental procedures and up to 20% off specialty treatments at more than 20,000 dental offices; up to 45% off eyeglass frames and lenses and 15% off contacts (excluding disposables) and LASIK and PRK procedures at more than 18,000 specialists; and up to 30% off at more than 25,000 alternative health practitioners, including chiropractors, dieticians, exercise specialists, acupuncturists and massage therapists. Members choose between two plan levels: “Premier” for $16.99 per month and “Plus” for $10.99 per month which only includes dental, vision, prescription, hearing and chiropractic/alternative health discounts. Last month. Metris launched the “InsideAccess” entertainment product. During the second quarter, Metris enhancement services revenues increased to $95.6 million, a 15% increase over 2Q/01 revenue of $82.9 million. In the second quarter, Metris added over 730,000 new enhancement relationships, resulting in active enhancement services memberships of 5.5 million. (CF Library 7/18/02; 7/29/02)
Marshall & Ilsley’s Metavante has completed the purchase of the assets of Spectrum EBP, a privately held, open, interoperable switch for exchanging online bills and payments. Metavante Electronic Presentment and Payment offers a comprehensive, fully scalable, end-to-end solution that allows companies to electronically prepare bills and statements, and enables their customers to receive them and make payments on the Internet.
Canadian credit card receivable balances have slowed from a growth rate of 17% in 2001 to about 6% this year. However, charge-offs and delinquency rates in Canada are only half those in the USA, although losses have increased to just over a 3% annualized rate from lows under 2% two and a half years ago. The findings are based on Moody’s Investors Service’s new “Canadian Credit Card Index” which tracks both securitized and non-securitized receivables. Moody’s says the Canadian credit-card market has grown rapidly in both charge volume and receivables. The volume of annual purchases and cash advances has risen to C$138 billion in 2001 from $84 billion in 1997 while outstanding balances nearly doubled over the same period to C$38.9 billion from C$20.5 billion; and there are now over 44 million cards in circulation in Canada. Yields on Canadian portfolios have been relatively stable over the past three years, staying largely within a 13% – 14% (annualized) range.
The “10th Annual Conference of the Smart Card Alliance” will be held Oct 7-9 in Arizona and will focus on ‘Catalysts for Convergence,’ with featured speakers such as MasterCard’s Simon Pugh and Joseph Giordano of ExxonMobil Speedpass. Executives will share lessons learned from large-scale rollouts of smart cards in financial services and retail, and from deployments of secure identity cards in government and corporate IT.
Canadian Tire Retail has inked a deal with TSYS to convert its existing paper gift certificates to electronic gift cards. Under the agreement, services already provided by TSYS to Canadian Tire Financial Services will be extended to integrate the existing electronic payment system with a new gift card system. Canadian Tire will offer the cards through its network of more than 450 stores. Totally, the company has more than 1,000 locations including gas bars across Canada. Canadian Tire has worked with TSYS since 1998, when Canadian Tire Financial Services converted its private label and MasterCard accounts from an in-house system to the TS2Â® processing system by TSYS.
Delinquency rates among the top U.S. issuers began to slow during the second quarter, now growing at an annual rate of less than 8%. Among the top VISA and MasterCard issuers, Bank One/First USA, Capital One, BofA, and Fleet reported lower delinquency rates this year than 2Q/01. Sub-prime issuers Providian, Direct Merchants, and Household led the top ten issuers with the highest delinquency rates and the largest increases during 2Q/02, compared to same quarter one year ago. Over the past twelve months, delinquency (30+ day) among the nation’s top issuers, has increased 41 basis points, from 5.45% to 5.86%. according to CardData (www.carddata.com). Meanwhile, Discover reported a 30+ day delinquency rate of 5.63% for the quarter ending 5/28/02, compared to 5.84% for the year-ago quarter. American Express delinquency rate stood at 3.1% for 2Q/02, compared to 2.9% for 1Q/01.
TOP TEN VISA/MASTERCARD ISSUERS –
DAYS 2Q/02 1Q/02 4Q/01 3Q/01 2Q/01 Y/Y CHG
1. Citigroup: 90+ 1.84% 2.13% 1.98% 1.82% 1.72% +7.0%
2. MBNA: 30+ 4.80% 4.97% 5.09% 4.90% 4.57% +5.0%
3. First USA: 30+ 3.83% 4.27% 4.46% 4.25% 4.10% -6.6%
4. Chase: 90+ NR 2.29% 2.22% 1.95% 1.90% NA
5. Cap One: 30+ 4.54% 4.80% 4.95% 5.29% 4.92% -7.7%
6. Providian: 30+ 10.16% 10.22% 8.81% 8.66% 8.04% +26.4%
7. BofA: 30+ 3.78 4.16% 4.12% 3.95% 3.81% -0.8%
8. Household: 60+ 3.90% 4.39% 4.10% 3.91% 3.60% +8.3%
9. Fleet: 30+ 3.74% 3.97% 4.05% 4.13% 4.40% -15.0%
10. Dir Merch: 30+ 10.2% 9.80% 9.70% 8.90% 8.30% +22.9%
30+ DAY AVG*: 5.86% 6.03% 5.88% 5.73% 5.45% +7.5%
NR- not reported * 60+ day and 90+ day are not meaningful
SOURCE: CardData (www.carddata.com)