Bank of America is marketing its second offering of the year of BAseries Notes, joining a parade of other card companies securitizing receivables in 2017.
BA Credit Card Trust 2017-2 is an initial $500 million transaction of Class A notes in a multi-issuance offering through the Bank of America, National Association’s (BANA) master trust. It follows six months after BAACT’s first issuance of the year that resulted in the selling of $2 billion of notes.
In 2016, BAACT – like other card companies such as Citi, American Express and Discover – took somewhat of a breather. The trust issued only $750 million in notes; prior to that, it had issued $6.4 billion in notes across 2015 and 2014.
Fitch Ratings on Thursday assigned an early AAA rating to the Class A notes, which benefit from by 31.75% credit enhancement – a level provided by the trust since March 2010.
Bank of America has been securitizing credit card receivables since 1986, but has only been sponsoring, servicing and originating for the trust since 2014 after absorbed its affiliate FIA Card Services (itself formed after the takeover of MBNA in 2006).
It has sold over $35 billion of its $92.3 billion managed portfolio (as of December 2016) into the trust, which only contains accounts that have been seasoned at least six years. (Older accounts have a lower likelihood of default and provide a credit risk boost to the pool).
In February, Moody’s reported the balance of the receivables owned by BACCT is more than 10 times over the minimum required to support its outstanding asset-backed securities.
The collateral backing BAACT is considered the weakest among peer issuers, Moody’s has reported, with a relatively higher average account balance and higher credit lines (81% had credit limits of $10,000 or more as of December).
The notes have an expected three-year maturity.
The deal was underwritten by Bank of America Merrill Lynch and Pierce, Fenner & Smith.