American Express TRS Charge-Card Receivables Harvard Case Solution & Analysis

American Express (TRS) Co is considering a proposal for securitization of its consumer charge card receivables portfolio. In the past, they relied solely on the captive finance subsidiary, Credco, to perform this function. The proposed structure was proposed securitization Lehman Brothers and depends heavily on the existing structure of the securitization of credit card receivables. ” Growing assets in the securities market is TRS to diversify their funding sources – however, there are reasons to be cautious. Due to the recent downgrades of American Express and Credco debt, perceived financial weakness of credit card debt supported by the issuers of securities, and the complex structure of the securitization of the proposal, TRS is concerned that 1) the market can absorb securitization as a sign of weakness, and 2) securitization can be profitable. Thus, the TPC has to decide whether to proceed with the securitization at this time. “Hide
by Andre F. Perold, Kuljot Singh Source: Harvard Business School 20 pages. Publication Date: April 20, 1993. Prod. #: 293120-PDF-ENG

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