Bloomberg News

HSBC Said to Offer Bond Tied to U.K. Credit Cards Bills

October 05, 2011

(Adds issuance data in third paragraph.)

Oct. 5 (Bloomberg) -- HSBC Holdings Plc plans to sell $500 million of bonds backed by credit-card bills to U.K. consumers in its first issue of asset-backed securities since 2007.

Europe’s largest bank is offering notes with an expected maturity of 2.9 years, according to a banker familiar with the transaction, who declined to be identified because terms aren’t set.

Issuance of asset-backed securities tied to credit-card payments have plunged as banks use deposits to fund new loans. About $8 billion of the debt has been sold this year, compared with $8 billion in 2010 and $47 billion in 2009, according to data compiled by Bloomberg. Relative yields are at the highest since June 2010.

The notes from Turquoise Credit Card Backed Securities plc Series 2011-1 are being marketed at a yield of 70 to 75 basis points above the one-month London interbank offered rate, said the banker. JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc are managing the sale with HSBC.

That compares with a spread of 17 basis points American Express Co. is paying on a sale of $1 billion of similar- maturity debt pooling U.S. credit card receivables that priced yesterday, Bloomberg data show.

Top-ranked debt tied to credit-card payments is yielding 81 basis points more than U.S. Treasuries, according to a Bank of America Merrill Lynch index. Spreads expanded to 82 basis points, or 0.82 percentage point, on Aug. 9, from 62 basis points on June 1, the data show.

--With assistance from Christopher DeReza in New York. Editors: Pierre Paulden, Michael Shanahan

To contact the reporters on this story: Esteban Duarte in Madrid at eduarterubia@bloomberg.net; Sarah Mulholland in New York at smulholland3@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net; Alan Goldstein at agoldstein5@bloomberg.net


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