Barclays, Amex offer combined $1.19B of credit card ABS

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Barclays Bank and American Express are offering a combined $1.19 billion of bonds backed by credit card receivables, according to rating agency presale reports.

The Barclays deal, Barclays Dryrock Issuance Trust Series 2017-2, consists of a $500 million senior tranche rated triple-A by both Fitch Ratings and Moody’s Investors Service, that benefits from 21% credit enhancement, consistent with its last securitization but three percentage points higher than its 2016 offering. There is also a subordinate tranche that is unrated and will be retained by Barclays. Both tranches have a final, legal maturity of May 2023.

According to Fitch, charge-offs and delinquencies of 60 days or more have been relatively stable for Barclays over the past two years. Since the inception of the trust, its average monthly payment rate (24.78% as of March 31st) has remained consistent.

The deal is structured with a revolving period, during which investors will receive floating-rate interest payments on the 15th day of each month, beginning in August; then, in July 2019, the notes enter a 12-month controlled accumulation period.

American Express Credit Account Master Trust Series 2017-5 is the sponsor’s fifth offering this year. The trust will issue $500 million of senior, triple-A rated Class A notes that benefit from 13% credit enhancement; $18.68 million of Class-B notes with 9.75% credit enhancement rated A+ by Fitch and Aa2 by Moody’s; and two tranches of unrated notes.

Both tranches are expected to mature in July 2022 and have a legal, final maturity of February 2025.
According to Moody’s , 91% of receivables in the trust are tied to accounts originated at least five years ago, the rating agency considers this statistic to be credit-positive as cardholders who have been making payments for a long period of time are less likely to default.

Furthermore, the concentration of subprime receivables in the pool is low. Only about 8% of cardholders with receivables in the trust have a FICO score lower than 660, compared with an average concentration of 13% in other similar bank card securitizations.

Moody’s noted that the pool contains a significant number of receivables for cards with no spending limits. Approximately 39% of the total trust consists of receivables in Amex’s Pay-Over-Time portfolio, which does not have a formal spending limit. This creates some degree of credit risk for the trust, as cardholders could run up their balances and increase potential charge-offs.

American Express Travel Related Services is a subsidiary of American Express that provides multiple products and services, including charge cards, travelers checks, and corporate and consumer travel products. Its parent company, American Express, has securitized credit card receivables since 1996.

Barclays Bank Delaware offers cobranded Mastercard, Visa, and American Express cards for companies in a variety of industries, including travel, financial services, and retail. Its securitization program began in 2012.

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