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European credit card deals get US flexibility

MBNA Europe's delinked programme should help Europe's ABS issuers to respond to investor demand

Originator: MBNA Europe Bank

Size: £10 billion maximum aggregate nominal amount

Arranger: Barclays Capital

Date: August 3 2004

MBNA Europe Bank has imported delinked securitization technology from the US, increasing the flexibility of its European credit card-backed ABS deals.

Until now, European credit card deals have been single-issuance, full capital structure deals. In a delinked deal, an issuer can issue tranches of securitized debt without having to issue differently rated tranches at the same time. If each tranche meets its enhancement requirement, then, subject to repayment tests, an issuer can sell junior and senior notes at different times and with different maturities.

MBNA Europe's delinked programme is backed by credit card receivables in one of its existing receivables trusts. The trust holds receivables for three issuers ? Deva One, Deva Two, and the newly created Deva Three.

The issuers invest in the trust. Deva Two funds its investment by issuing notes directly into the market. Devas One and Three sell notes indirectly by issuing loan notes to special purpose vehicles set up by Chester Asset Receivables Dealings Issuer Limited (Cards).

Deva Three is the key to delinking the programme. Structurally no different to its siblings, it holds a much simpler interest in the trust and issues its loan notes differently.

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