It appears a matter of when, not if, KKR and Varde Partners-backed lender Latitude Financial Services comes to market with an asset backed security worth as much as $1 billion.
Street Talk understands Latitude is already in front of credit investors marketing the potential issue, unperturbed by the holiday season and intent on getting it away in coming weeks.
Latitude is an Australia and New Zealand consumer finance unit formerly known as GE Capital Finance and home to the likes of 28 Degrees credit cards and Myer Card.
New owners - financial heavyweights Varde Partners, Deutsche Bank and KKR - bought the business in early 2015, and have an estimated 2.6 million customers across its sales finance and credit cards and personal loans divisions.
While expectations are building of an initial public offering for Latitude, first port of call is believed to be a $500 million to $1 billion credit card securitisation in what would be the first in a series of deals from the company.
While sources said a marketing roadshow got underway this week, it is understood Latitude first marketed the potential offer late last year however ran out of time to get the deal done.
For Latitude, it is believed to be about lengthening and diversifying their own funding mix. Its own book is said to be funded by securitisation facilities that are short-term in nature, and issuing securities in the ABS market could be helpful.
It has told potential investors that it would like to run one-to-two such issues each year, offering securities at various points in the capital structure.
While asset backed securities are nothing new in Australia, Latitude is believed to be eyeing something a little different to offers in the market from the likes of Macquarie Leasing, Flexigroup and Eclipx Group.
Credit cards deals are rare in Australia because of restrictions on the local banks. Latitude's securities are expected to be most like those issued by Fisher & Paykel in New Zealand. This is because Latitude business tends to be more like consumer facing loans rather than bank credit cards.
It means demand and pricing may be hard to predict, and hence the substantial marketing efforts from the Latitude team.
It is understood Bank of America Merrill Lynch - which is the biggest arranger of credit card securitisations in the US - has been quite involved. BAML also played a big role funding the Latitude buyout in 2015, along with Citi.
