Fifteen months after acquiring the receivables of the Fingerhut Master Trust series 1998-2, CompuCredit Corp. plans to securitize roughly $130 million of liquidating accounts in a private transaction seen pricing in mid-November, sources said.
The receivables in the yet-to-be named transaction will be the remaining assets once the FMT 1998-2 completes its scheduled amortization, estimated for Nov. 15. "The old deal will have to fully pay down before this [CompuCredit] deal can price," an investor said.
Fingerhut Master Trust 1998-2 was initially a $450 million floating-rate offering which priced in April 1998. The $337.5 million senior A class and $51.1 million B class have each paid down. The receivables being securitized by CompuCredit are what are left of the $61.3 million triple-B rated C class, which was initially placed privately with a 95 basis point coupon over one-month Libor.
Collateral performance has improved in recent months, with chargeoffs totaling 25.8% as of Sept. 30, according to the servicer report, declining for the third straight month and down from the all-time high of 43.4% seen in January.
Portfolio yield, however, sits at 68.6%, its highest level to date, after steadily increasing since May. Delinquencies have trended downward throughout the year, after peaking in the four-month period from October 2002 through this past January.
CompuCredit, which has a history of growth via portfolio acquisition, will act as servicer for the pending offering. CompuCredit has priced seven term ABS deals since 1997, five of which have been private placements, according to records filed with the Securities & Exchange Commission. It has not offered a term ABS since July 2001, when it priced $500 million 2001-1 notes via Deutsche Bank Securities.
UBS is structuring the new offering for CompuCredit, with the specific enhancement levels and tranche sizes yet to be hammered out, sources familiar with the situation said.
"When all is said and done, the structure will look like that of any other liquidating credit card portfolio the market has seen," the source added.
The most recognizable comparison to this transaction, albeit a much larger example, is last year's $1.2 billion Pass-through Amortizing Credit Card Trust securitization of charged-off accounts from Providian Financial.
CompuCredit was also involved in that deal, purchasing and servicing a portion of the $2.4 billion total removed from Providian's trust.