The credit card asset class has trailed other consumer sectors in terms of issuance this year, posting less than $6 billion. But First National Master Trust is preparing to boost the sector's tally by raising $300 million from the capital markets.
A pool of mostly prime-quality credit card receivables will secure the repayment of the notes, according to ratings analysts at Moody's Ratings.
The First National program does not often come to market. It raised money from the securitization market only twice last year, and before that the last time it issued notes was in late 2018, according to the Asset Securitization Report's deal database. The current deal will issue three tranches of classes A, B and C notes, according to Moody's and Fitch Ratings, which also assigned ratings to the notes.
As of the transaction's March 2024 cutoff date, Fitch noted that its collateral performance was in line with Fitch indices—even though some of that was mixed. Gross chargeoffs were 2.93%, an increase from 2.61%. Delinquencies in the 60-plus day period was 0.98%, also an increase, from 0.90%. There is an upside, however, as the pool's monthly payment rate was 28.66%, up from 27.00% the previous year.
All three tranches have a May 15, 2030 final maturity date, according to the rating agencies. Pricing guidance is available for just the AAA piece, and those notes are expected to yield 5.4% on the three-month interpolated yield curve, according to the deal database.
The class A and B notes benefit from 22.0% and 11.5% in credit enhancement, respectively, which should help mitigate interest rate risk, Fitch said. All notes will pay out on a soft bullet basis.
RBC Capital Markets, J.P.Morgan Securities and Wells Fargo Securities are underwriters on the deal, according to Fitch.
Moody's and Fitch assign Aaa and AAA to the class A notes, respectively.
