Revenues from Brex Inc.'s charge card program extended to growth stage, medium- and enterprise level businesses will secure $260 million in asset-backed securities that Brex Commercial Charge Card Master Trust is offering to investors, after a two-year absence from the market.
Notes from Brex 2024-1, and the related account characteristics will reflect several operational changes that Brex implemented around a year ago, according to Kroll Bond Rating Agency. It tightened underwriting guidelines and bumped up its bank liquidity capacity by adding a third bank lender. The notes have 3.65% in initial overcollateralization, which is also the transaction's target OC. Both are an increase from the 1.70% seen on the Brex 2022-1 deal, KBRA said.
The transaction will offer three tranches of class A and B notes to investors. Classes A1, A2 and B benefit from initial credit enhancement equaling 25.77%, 6.64% and 4.42% of the pool balance, respectively, according to KBRA. The company expects a base case net loss of 1.30%, an increase of 1.20% on the previous deal. The rating agency assigns ratings of AA to tranches A1 and A2, and B to the B tranche, the rating agency said.
Barclays Capital and Credit Suisse Securities are managers on the deal, according to Asset Securities Report's deal database. All three tranches have a legal final maturity of July 15, 2027.
As for the pool, it is made up of 13,249 accounts which have a $34,974 average principal balance. That balance is lower than the $46,452 on the Brex 2022-1 deal. The average credit limit on the accounts, $270,122, is lower than the $413,103 seen on the Brex 2024-1 deal, KBRA said. Also, the current deal has an underwriting cash balance of $4.5 million.
Since the Brex 2021-1 deal, software, healthcare and financial services represented the top three industries in the pool. On the Brex 2024-1 deal software development replaces financial services in the lineup of top industries, so the top three industries include the software, healthcare and software development, accounting for 18.45%, 7.89% and 5.12%, respectively.
