Chase Issuance Trust is preparing to sell $1 billion in class A securitization bonds, giving the year its first credit card securitizations. The notes will be issued through two class A tranches and two separate transactions, the 2024-1 and 2024-2, with each one issuing $500 million.
The transactions have almost identical characteristics, from credit support of 14.00%, thanks to subordination from B and C tranches, according to ratings analysts at S&P Global Ratings. Visa and Mastercard receivables secure the transaction, which has a slated closing date of January 31. The 2024-1 notes, which are expected to mature on Jan. 15, 2027, and have a legal final maturity date of Jan. 16, 2029. The 2024-2 notes, meanwhile, are expected to mature on Jan. 16, 2029 with a legal final maturity of Jan. 15, 2031.
Both tranches are slated to close on January 31, according to Asset Securitization Report's deal database, while the database and Fitch Ratings say that J.P.Morgan Securities will act as the deal's manager and lead underwriter. Both Fitch and S&P assign AAA ratings to the class A tranche on both transactions.
S&P says that the AAA ratings also stem from a 5.5% base-case loss rate, a 22.5% base-case payment rate, a 15.0% base-case yield, and a 3.0% purchase rate assumption, according to its pre-sale report.
Rating agency Fitch noted that as of December 31, receivables in the CHAIT managed portfolio totaled about $9.4 billion, with accounts having an average age of 22 years, an average credit limit of $15,455 and average total receivables of $1.8 billion. As of the December 2023, collection period, Fitch said, the pool's chargeoff rate was 1.85%, an increase of 1.56% from the year before. Still, this is well below the rating agency's gross chargeoff steady state of 6.00%.
Delinquencies followed a similar trend, with the 60-day-plus delinquencies reaching 0.70%, compared with 0.52% from the same period a year before. In another positive performance metric, chargeoff rates remained strong compared with pre-pandemic levels, with 60-plus-day delinquencies ticking closer to the 0.82% from February 2020.
