Prof. Ian Giddy, New York University
When Diners Club (Singapore) launched its credit card business last in 1999, finance manager Peter Tam had no idea that new customers would account for 20 percent of the company's total client base within six months. Now Tam forecasts that this segment will make up more than half of Diners Club subscribers in the next three years. And as it grows, so does the need to fund the business.
Tam needed a funding structure that
would not lock in Diners Club with a fixed amount
of debt for a fixed period of time. He had to have
room for more borrowings in line with the growth of the business. The answer
came in the form of a revolving asset-backed securitization.
It allows Diners Club to sell securities backed by
credit card receivables on a monthly basis. The size may vary according
to its working capital needs at that time. "With
the growth in credit card base, we need a funding structure
that would grow as our receivables grow. Securitization did just
that," Tam says. ABN Amro Singapore managed the transaction.
ABN AMRO is a global leader in originating and structuring securitization transactions, with capabilities in North America, Europe, Australia, Asia and Latin America. ABN AMRO is also one of the largest administrators of asset-backed commercial paper programs with over $38 billion in outstanding ABCP (2003 data). In addition to its many asset-backed commercial paper conduits, including Windmill Funding, Amsterdam Funding, Tulip Funding and Tasman/Abel Funding, ABN AMRO has securitization professionals who specialize in origination and execution of mortgage and asset-backed securities around the globe. ABN AMRO also has a fixed income sales force in leading financial centers as well as key emerging markets.
1. How does the securitization of corporate