Near-prime revolving credit card accounts will secure the Mercury Financial Credit Card Master Trust, Series 2022-3, raising $225 million in asset-backed notes in the process.
With employees located in Wilmington, DE and Austin, Texas Mercury Financial focuses on extending credit to consumers with FICO scores of 600-700, Kroll Bond Rating Agency said in a recent pre-sale report. As of September 30, 2022, Mercury Financial had more than $2.3 billion in receivables and more than 1.3 million active customers.
Mercury Financial specializes in serving customers with a bureau depth of 20-30 years; they own two to five credit cards with an average credit line of $3,000-$5,000, KBRA said. Typically, usage rates on active accounts exceed about 60% of their self-reported income of $50,000-$70,000.
Mercury Financial Credit Card, 2022-3, is the company's seventh securitization issued from the Master Trust, and the series of notes will be allocated a percentage interest in the Trust portfolio. MFCCMT 2022-3 includes a 12-month revolving period where no principal payments are made on the notes, except in the event of an early amortization.
Mercury Financial, the deal's sponsor, will also serve as the seller, program manager, servicer and administrator.
MFCCMT 2022-3 will repay the notes through a four-class structure that includes subordination, except for the D notes. Other forms of credit enhancement include overcollateralization and a reserve account.
The transaction's legacy portfolio comprises 35% of the trust portfolio, a smaller amount than the 43% of the MFCCT 2022-2.
As for the borrower profile, KBRA noted, the accounts' average credit limit is $2,971, lower than the $3,013 for the MFCCMT 2022-2 transaction. On a weighted average (WA) basis, the accounts have a FICO score of 667, and are aged 48 months, according to the rating agency.
Initially, the notes have initial credit enhancement levels of 30.0%, 21.05%, 17.10% and 6.90% on the A, B, C and D classes. KBRA expects to assign ratings of 'A' on the class A notes; 'BBB' on class B; 'BB' on the class C notes and 'B' on the class D notes.
