Mercury Financial Credit Card Master Trust is preparing to issue $500 million in credit card asset-backed securities, a deal that is growing in several respects, such as the number of trust accounts and amounts outstanding, and contains a smaller percentage of legacy portfolio assets compared with the 2022-3 transaction.
The deal, known as MFCCMT 2023-1 had 1,603,703 trust accounts, according to a pre-sale report from Kroll Bond Rating Agency. Mercury Financial will use the proceeds to repay and redeem all of the Series 2021-1 notes, according to KBRA. Outstanding receivables from organic accounts in the trust portfolio amounted to $1.79 billion, as of Dec. 31, 2022, a 23.2% increase over the $1.45 billion in the portfolio as of Aug. 31, 2022.
On average, active accounts in the trust had a balance of $2,018, while the average credit limit is $3,049, compared with $2,971 in the MFCCMT 2022-3, KBRA said.
With offices on Wilmington, DE and Austin, Texas, Mercury Financial is known as one of the largest non-bank credit card companies in the U.S. The company issues general-purpose credit cards to near-prime customers under the Mastercard and Visa brands, according to KBRA.
As for underlying asset performance, KBRA noted that accounts that were one- to 30 days past due have a delinquency rate of 3.50%. Delinquencies rates dropped noticeably with longer timelines. For instance, delinquency rates were 2.50% among accounts that were 31- to 60 days past due, and slightly under 1.00% for accounts that were 151- to 180-days past due, according to KBRA.
MFCCMT 2023-1 will issue four classes of notes, some of which—except for the class D notes—will benefit from subordination. Other forms of credit enhancement include overcollateralization and a reserve account, according to KBRA.
The rating agency intends to assign ratings ranging from 'A' $383.2 million, class A notes; 'BBB' on the $48 million, class B notes, 'BB-' on the class C notes and 'B' on the class D notes. All of the notes have a Sep. 20, 2027 final scheduled payment date.
