16 August 2004 – Legal news, law news, law firm news & research at LAWFUELClifford Chance has assisted MBNA Europe Bank Limited in structuring and executing the first European de-linked securitisation platform. This important step forward for the European Securitisation market combines two key features:
· the ability for MBNA Europe to issue tranches of securitised credit card debt through the same vehicle with different maturities not dependent on other tranches of securitised debt and different credit ratings; with
· the speed and flexibility of the first asset-backed MTN programme that allows issuance with the filing of a pricing supplement only.
As a result MBNA Europe will be able to respond to funding requirements and market conditions (including reverse enquiries from investors) efficiently and rapidly by identifying opportunities while utilising less than two weeks from the start of a transaction to the issuance of the MTN. This contrasts with the timing of 6 to 8 weeks for bond issuance on current UK credit card securitisation programmes.
The first three tranches of MTN, 2004-A1, 2004-B1 and 2004-C1, were priced throughout July with settlement on 3 August 2004 with a combination Barclays Capital, Deutsche Bank and JP Morgan as lead dealers. The de-linked programme is also capable of achieving debt-for-tax for US investors for all three classes of MTN, should MBNA Europe ever choose to place the MTNs into the United States.
Kevin Ingram and Debashis Dey, partners in the International Securitisation Group of Clifford Chance, who led the project, commented on its success:
Kevin Ingram said: “We are pleased to have helped MBNA Europe deliver such a flexible and successful product. It has taken 14 months of focussed hard work to get there and MBNA Europe should be congratulated for implementing such an innovative and efficient funding platform. Aspects of both the de-linked technology and the asset-backed MTN programme have wider implications for the European securitisation market and I would expect other programmatic issuers, for example the residential mortgage master trusts, to see the benefits and to seek to utilise some of our structural advances in their own programmes.”
Debashis Dey added: “This was a ground-breaking evolution of the funding platform. By adding the de-linked programme to MBNA Europe’s existing credit card receivables trust MBNA has the benefit of the current securitised receivables portfolio with the markedly faster execution of ABS MTNs. MBNA will now be able to issue independent tranches of notes in a rapid and efficient manner – the same as for their US programme. I hope that other issuers take advantage of both the ABS MTN innovation and some of the developments of de-linked.”
Securitisation partners Kevin Ingram and Debashis Dey led the team at Clifford Chance with assistance from Michael Poulton, Greg Man, Fiona McCrindle, Adrian Montague, Juliet Buckley, Kamar Jaffer and Mary Sutton. Partner Stephen Shea provided tax advice with assistance from Kevin Conway and Kirsten O’Neill, with VAT advice provided by partner Etienne Wong assisted by Alex Beattie. Linklaters partner, Richard Hughes led the team advising Barclays Capital as arranger and the dealer group. Paulette Mastin of Linklaters also advised Deutsche Trustee Company Limited as Security Trustee and Note Trustee. Mr Hughes has worked on MBNA transactions since the establishment of their first credit card receivables trust in August 1995 and commented: “My long relationship with MBNA and the UK credit card securitisation market stretching back 9 years allowed us to provide timely and focussed advice to Barclays Capital and the other dealers and helped secure a successful structure and first issuance for everybody.”
Allen Appen, Managing Director at Barclays Capital commented: “We were very pleased with the success of establishing the first European de-linked issuance platform with MBNA. It is a major step forward and we see it being implemented more widely by issuers in both the credit card and mortgage asset classes”.
The Global Treasurer of MBNA, Thomas D. Wren noted: “This programme holds benefits for issuers and investors alike. Investors enjoy larger transactions tailored to their needs with greater liquidity while the issuer enjoys increased market access, a larger investor base and the opportunity to create liquidity within the programme. Our strong commitment to both our business and the capital markets has allowed us to be the first to introduce this technology into the European marketplace. I am delighted that the markets have recognized this commitment through the overwhelming success of our inaugural transactions.”