Discover sold a total of $950 million securities backed by credit card receivables from its first 2015 transaction.
The deal was originally slated to sell $500 million of three year, triple-A rated notes but was upsized by $450 million and priced at a spread of 35 basis points over one month Libor.
Moody’s Investors Service, Fitch Ratings and Standard & Poor's assigned preliminary ratings to the senior bonds that benefit from credit enhancement at 25.5%.
Deutsche Bank and RBC Capital Markets are the lead underwriters.
As of December 31, 2014, Discover managed an aggregate credit card portfolio of approximately $56.1 billion, of which it has sold approximately $30.0 billion to the Discover Card Execution Note Trust. Upon issuance of this deal, 27 series of class A notes totaling $15.20 billion, will be outstanding, according to the Fitch presale report. The bank completed 5 deals totaling $5.1 billion of securitization in 2014.
Discover Bank increased the available credit enhancement (CE) for this trust by issuing a single tranche of class D notes on July 2, 2009, which was upsized on Jan. 13, 2010 and again on Dec. 16, 2011.
The average card account balance in the pool was $3,081 as of January 2015, one of the lowest compared to Discover’s Big 6 competitors, according to the Moody’s presale report. A lower balance requires a lower minimum payment, making it easier for cardholders to stay current.
The pool is also comprised of accounts the issuer originated at least five years ago. Fitch stated that the benefit of a more seasoned borrower pool benefits the deal because “cardholders who have been making payments on their cards for a long period of time are less likely to default in the future”.