American Express Credit Account Master Trust, Series 2022-2, is preparing to issue $571.4 million in asset-backed securities (ABS),
The transaction is expected to garner ‘AAA’ ratings, on the $500 million, class A notes, owing to the good servicing capabilities of American Express Travel Related Services, supporting historically strong credit performances from the collateral pool, according to FitchRatings. The deal has no Libor exposure, since all of the notes are fixed rate.
Another piece of the deal, the $21.4 million class C notes, is unrated by Fitch.
Barclays Capital, MUFG Securities Americas and Wells Fargo Securities are underwriters on the deal, which is structured to include a revolving period during which investors will receive fixed-rate interest payments. At the end of the revolving period, American Express Credit, 2022-2, will enter a controlled accumulation period, which is slated to begin on May 1, 2024, the rating agency said.
The controlled accumulation period is slated to last for 12 months, Fitch noted. The servicer, however, may elect to shorten this phase, depending on the expected monthly principal collections and factoring in the expected monthly principal collections, assuming the lowest principal payment rate for the past 12 months and the amount of principal payments that are due to other certificates during the period, Fitch said.
In terms of credit support to the notes, the class A certificates benefit from a 12.5% credit enhancement level, derived from 3.75% and 8.75% subordination of the class B certificates and collateral interest, respectively.
Further, investors are protected by a provision that would accelerate the payout of principal, if triggered by any one of a dozen events specified in the deal covenants, Fitch said. This mechanism could protect note holders from a prolonged deterioration in collateral, transferor insolvency or servicer default, either automatically or if a majority of investors approve of that course of action.
