by Collections & Credit Risk

Approximately $464 million in debt portfolios is being listed on the public portion of various Web sites this week, up from $322.6 million last week. Market sources say several large deals also are percolating behind the scenes with bank credit card issuers dealing directly with long-time buyers rather than searching for bids.

While credit card paper still makes up the majority of the market, such areas as student loans, out-of-statute paper, auto deficiencies and utility paper are capturing more interest from potential buyers, market sources agree.

“We are seeing a lot of bank product going direct [to selected buyers]. We are seeing them turn a lot of product of it is not visible,” says Sean McVity, managing partner with debt broker Garnet Capital Advisors.

Another market source thinks banks have been holding back this year because their earnings, and collection rates, have been strong.

“As far as banks go, truly most of them are pleased with their numbers so I don’t think there’s going to be any cleaning out [of bad paper] to make their numbers” before the end of this month, he says.

That could translate into a supply overhang on the market next year, especially if banks find they need the cash in a tougher business environment than they’ve had in 2006.
McVity notes that while credit card debt prices have held steady, price gains are most dramatic in auto deficiencies and student loans.

Another trend “is a growing recognition of out-of-statute accounts as an investment product, rather than an ineligible,” says McVity. Out-of-statute paper is bringing 25 to 50 basis points, a quarter to a half cent on the dollar.

The largest single portfolio being listed this week is a $280 million offering of charged-off consumer loans on the Garnet Capital site. Bidding for the portfolio ended Dec. 14, however.
Garnet has three deals coming to market the week of Dec. 18, a $15 million portfolio of performing and non-performing consumer installment loans, a $4 million consumer finance loan offering and $5.3 million of auto deficiencies from a debt buyer.

National Loan Exchange is listing a $36.8 million portfolio from HSBC Mortgage Services along with a $10 million offering from HSBC Mortgage.

The WorldWide Debt Exchange has a $7.6 million credit card portfolio with 2,224 accounts and an average charge-off date of Mar. 31, 2003, with bids due Dec. 20. It’s also listing an $11.7 million credit card portfolio with 3,233 accounts and an average charge-off date of April 1, 2003. Bidding for that also ends Dec. 20.

Those two portfolios also are being listed on the Debt Connection and Kaulkin & Ginsberg’s CollectionIndustry.com.