Mission Lane Credit Card Master Trust is preparing to sell $300 million in asset-backed securities, secured by revenue from sponsor Mission Lane's pool of retail customers.
The company's customers are traditionally underserved, and as of Dec. 31, 2024, its managed accounts had weighed average (WA) FICO scores of 626, APR of 32.09%, and an average balance of $1,239, according to Kroll Bond Rating Agency. The pool is composed of 2.6 million accounts.
The MLCCMT, series 2025-A, will issue the notes through five tranches of class A, B, C, D and E notes, KBRA said. All the notes have a legal final maturity date of May 15, 2030. The deal features a revolving period that extends almost two years, and notes are shut out from principal payments, unless there is an early amortization event.
MLCCMT, series 2025-A's notes benefit from initial credit enhancement of 29.3%, 21.4%, 13.2%, 6.8% and 3.0%, on the class A, B, C, D and E notes, respectively. One particularly strong aspect of the deal is that notes are also protected by a reserve account that starts off at 0.0%, but whose funding levels vary in line with three-month average excess spreads, if they fall below certain thresholds, according to KBRA.
One aspect of the deal is fixed, however, KBRA said. MLCCMT, series 2025-A must maintain a transferor amount equal to 1.50% of the aggregate revenue from the credit card payments, KBRA said.
KBRA assigns AA, A, BBB, BB and B+ to the A, B, C, D and E notes, respectively, the rating agency said.
Some aspects of the series 2025-A's credit consideration are mixed. While the credit card products are like what the industry overall has been offering since the 1990s, delinquencies and charge-off rates had increased in the trust portfolio since 2022, and stayed elevated through 2024, even through seasonal fluctuations.
Mission Lane is the servicer on the deal, while Vervent is the backup servicer.
The trust portfolio is geographically diversified, with California, Florida and Texas accounting for the top three percentages of the portfolio, at 11.5%, 9.% and 8.7%, respectively.
