Bank of America is sponsoring a $500 million asset-backed securities (ABS) backed by revenue on revolving credit card accounts, hitting the market at a time when the program's collateral is demonstrating slight performance weakness.
April 2023's collection period showed noticeable weaknesses compared with a year ago, as 60-plus day delinquencies were 0.80%, up noticeably from 0.61% in April 2022, according to a pre-sale report on the deal, Fitch Ratings. Gross chargeoffs, meanwhile, reached 2.36%, up slightly from the rate of 2.23% seen in April 2022.
Those performance numbers are actually an improvement when considered in a month-over-month context, according to Fitch. The 60-plus day delinquencies for April 2023 were only slightly higher than the rate of 0.79% in March 2023, according to Fitch. Gross chargeoffs, meanwhile, were down 10 basis points from a month ago, the rating agency said.
As for monthly payment rates, Fitch found that it came in at 25.17%, down from 27.06% as of April 2022. Fitch notes that the April 2023 performance is trending below the 12-month average levels.
The current deal will bring the number of outstanding class A tranches under the BA Credit Card Trust (BACCT) program to five, according to S&P Global Ratings, which will assign ratings to the notes. Overall the BACCT program will have $9.47 billion in outstanding invested notes.
The current deal, BA Credit Card Trust Class A, 2023-1, has 31.75% in credit support provided by the B, C and D certificates, according to a pre-sale report from S&P Global Ratings. Only 21.25% is available to the class A notes under S&P's stress scenario, however, because it assumed that the class D certificates will be written down before amortization.
Both S&P and Fitch expect to assign a 'AAA' rating to the class A notes, which has a legal final maturity date of May 15, 2028.
