Thursday, Alliance Data Systems Corp. (ADS), a provider of loyalty and marketing solutions, said it closed $1.3 billion in conduit liquidity facilities. The company noted that World Financial Network National Bank, its private label credit card banking unit, has completed the renewal of its $1.15 billion AAA conduit facility, including additional new capacity of $150 million. Also, the company renewed a $150 million AAA conduit facility for its Utah industrial bank, World Financial Capital Bank.
According to Alliance Data, the facilities fund both existing and new private label credit card programs, with only about $300 million currently utilized to finance outstanding card assets. It also provides a large source of untapped liquidity to fund growth and/or portfolio acquisitions.
The company pointed out that its private label credit card business currently employs three sources of funding for its roughly $4.3 billion portfolio, representing about 100 brands, including FDIC-insured CDs, private conduit facilities and term asset-backed securitizations.
Bob Armiak, senior vice president and treasurer of Alliance Data, stated, "These latest facility closings further solidify our liquidity position for both current and future funding as needed. We have locked in extremely favorable spreads with these facilities, as rates charged for liquidity have improved dramatically over the past several months."
Armiak added, "We've raised in excess of $4 billion - via renewals as well as through new vehicles - thus far in 2009, of which $3.5 billion can be directly utilized for our private label business. The remainder was raised by the Company to finance projects such as our ongoing stock buyback program, and acquisitions for our Epsilon and LoyaltyOne businesses as well as further enhancing our general liquidity position."
According to Ed Heffernan, president and chief executive officer of Alliance Data, the liquidity facilities support the company's plan of augmenting its private label business by taking advantage of the current favorable funding environment for acquiring high-quality credit card portfolios to supplement its organic growth.
ADS closed Wednesday's regular trading session at $61.08, down $0.62, on a volume of 1.6 million shares.
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