An upsized Discover Bank securitization will raise $1 billion in asset-backed securities through the Discover Card Execution Note Trust, 2023-A2, from the Discover Card Master Trust I.
The single-tranche DCENT, 2023-A2, will issue notes off of a collateral pool of prime cardholder accounts. The trust will market the notes through Bank of America Merrill Lynch, Barclays and Wells Fargo Securities, which are in the role as managers, according to information from Asset Securitization Report's deal database.
Slated to close at the end of the month, DCENT 2023-A2 was originally expected to issue $500 million in fixed-rate notes, will offer a coupon of 4.93% over the I-Curve, according to Finsight.
Ratings analysts from S&P Global Ratings say the senior notes receive 21% in credit support from B, C and D classes of notes, a level that it says is enough to withstand its 5% base-case loss rate. It should also provide enough cushion to shore up the notes against an 18.00% base-case payment rate, a 16.00% base-case yield, and 2.00% purchase-rate assumption for the notes.
A quick overview of the prime collateral shows a pool of geographically diversified, well-seasoned accounts with an average balance that is a little below pre-pandemic levels, analysts at S&P said. Even with the dip the average balance has remained steady at some $3,000 since 2021, they said.
Moody's Investors Service also plans to rate the notes, and assigns 'Aaa' to the class a notes, while S&P, similarly, assigns 'AAA'.
