Master Credit Card Trust II is pricing a $1.4 billion securitization of credit card receivables, offering investors high-quality notes that rely on the strength Bank of Montreal to keep payments on track.
As of the collateral pool's November 2022 collection period, the credit card revenue had low delinquencies in the 60+ day range, around 1.09% according to Fitch Ratings, which has assigned ratings to the notes. Net chargeoffs were also low at 2.59%. Monthly payment rates were 55.81%, a robust level, according to Fitch.
BMO Capital Markets, Barclays Capital and Citigroup Global Markets are lead underwriters, while Bank of Montreal sold the receivables to the deal. The transaction is fixed rate through and through, from the collateral to the notes. This appears to be a retreat from the 2022-4 and 2022-5 deals, where at least the class A notes priced over the Secured Overnight Financing Rate, according to Fitch.
Coupons are 5.09% on the most senior class A2 notes, which will issue $657.5 million, and 4.51% on the A3 notes, according to the Asset Securitization Report's database. Pricing guidance ranges from 62 to 64 basis points over the benchmark on the A2 notes to 78 to 80 bps over the benchmark on the A4 notes.
Subordination in the capital structure will provide credit enhancement to the notes, the rating agency said.
Fitch expects to assign ratings of 'AAA' to the $400 million, class A notes; 'AA' to the $8.4 million, class B notes; and 'BBB' to the $14.8 million class C notes.
