VISA IPO May Ease Credit Crunch
March 11, 2008
The proposed VISA IPO (initial pubic offering) may raise as much as $19 billion which some experts suggest may help the overall economy get a much needed jump start. In addition to being welcome news to Wall Street, the IPO may also be able to help loosen up the credit knot currently holding many transactions in limbo.
It should be noted that the Visa IPO will have almost no direct effect on those who carry the card. However, the banks that have issued those cards may see a potential windfall of nearly $10 billion which might be enough to entice them to ease credit lines which would help stimulate new consumer loans.
Ben Woolsey of CreditCards.com recently stated: “That’s a good thing for the banks, and a good thing for consumers. It might help ease the credit crisis a bit.”
Domestic banks have seen historic losses recently, most of which are associated with defaults on sub-prime home loans. The bad news is the fall isn’t over yet and more losses are expected over time. This infusion of cash through the IPO for those associated with Visa may be life blood in a sense.
In a SEC filing, Visa reported that it would offer 406 million shares at $37 to $42 each, following its rival MasterCard in shifting from being a privately held interest to a publicly traded company.