Improved market conditions likely sparked Target Corp.'s announcement last week that it is in talks with "several well-qualified partners" interested in buying its credit card portfolio.

However, it's perplexing that it's taken so long for buyers to express interest, as news of such talks has been expected for the past six months, says Robert K. Hammer, CEO of RK Hammer Associates, which earlier this month reported a return in card-portfolio sales this year after a lull the past two years. 

Target earlier this year took its credit card portfolio off the market because of a lack of suitable offers. 

Market conditions, however, have changed, Hammer says. Buyers now have sufficient capital to meet regulators' needs, and credit quality has improved, he says.

"Both the economy and financials have improved to such an extent that buyers are back in the room to bid," Hammer says.

As such, Target can expect to get a better price than what it might have gotten last year, Hammer says. "If they don't, something else is wrong that we don't know about," he says.

Premiums–the bonus buyers pay in excess of the loans they purchase–are in the 16% to 16.5% range, up from 14% last year, mostly because banks are willing and able to pay more, he says.

And don't be surprised if JPMorgan Chase & Co. is involved in the Target negotiations, Hammer says. "Chase would be at the top of my list," he says.

Target spent more than $2.8 billion to divorce itself from Chase, which in 2008 paid $3.6 billion in an unusual deal to finance 47% of Target's card receivables while the retailer retained control of the overall operations. 

Some initially saw the deal as the prelude to Chase's eventual takeover of the entire portfolio, but industry insiders said it eventually limited Target's ability to negotiate with other potential buyers.

Chase Card Services spokesperson Paul Hartwick declined to comment, saying the issuer doesn’t comment on speculation.

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