UPDATE1-AMEX prices larger $911 mln ABS deal as demand rises

(Adds quote and pricing details, byline)

By Nancy Leinfuss

NEW YORK, April 28 (Reuters) - American Express Issuance Trust's credit card securities offering was priced at a larger $911.8 million size and lower funding costs to the issuer on Wednesday amid hearty appetite from investors.

The sale's $850 million AAA-rated 2.94-year notes priced at a tighter spread of 25 basis points over one-month Libor, compared with earlier guidance of 25 to 30 basis points over one-month Libor and an initial size of $750 million for the tranche, market sources said.

The $61.8 million AA-plus rated 2.94-year notes were priced at a leaner spread of 60 basis points over one-month Libor, compared with earlier guidance of 65 to 70 basis points over one-month Libor and an initial size of $54 million, market sources said.

American Express's credit card securitization was met with strong demand from investors. Appetite for ABS has been high but supply remains limited leaving many deals oversubscribed.

"The deal priced on the tighter side of price talk indicating there was more than enough interest from investors for the sale. American Express is one of the better performing trusts out there," said Mike Kagawa, ABS portfolio manager at Payden & Rygel.

JPMorgan Securities, Barclays Capital and Banc of America Merrill Lynch are underwriters for the sale, sources said.

The credit card segment has been largely absent from the ABS market this year amid sweeping changes to the securitization landscape. A tougher regulatory and legislative environment combined with new accounting rules and tighter lending standards have all worked to clamp down on credit card issuance.

After leading supply over recent years, credit card issuance has accounted for a paltry $2 billion of the $35 billion of securities sold so far this year.

Many bank credit card issuers are turning to other funding alternatives to securitization, like the unsecured corporate debt market, while others are simply relying on their own deposit base to fund new consumer loans.

Over $100 billion of credit card securities are expected to mature this year and market participants expect just a portion of that to funded through debt securitization. (Editing by Leslie Adler)