Synchony Financial's federal saving bank, known as Synchrony Bank is returning to the asset securitization market to raise $500 million in de-linked credit card receivables.
The second issuance this year through the Synchrony Credit Card Master Note Trust (SYNCT), the series 2023-2 will issue just one class of notes, according to pre-sale report from Moody's Investors Service about the deal. The rating agency plans assign a rating of 'Aaa' to the class A notes, which has an expected maturity date of Oct. 15, 2026.
Citigroup Global Markets, RBC Capital Markets and TD Securities are lead underwriters on SYNCT 2023-2, which benefits from subordination at a level of 26.0%, Moody's said. Synchrony Bank serves several roles on the deal aside from sponsor, including originator of the card accounts and servicer.
The securitization appears have an almost equal balance of credit strengths and challenges, including Synchrony's significant experience as a servicer. Moody's notes that the bank has issued securitized credit card ABS since 1997. It had a $92.1 billion managed portfolio of Sept. 30, 2023 (the collateral pool's cutoff date), about $7.7 billion of which has gone into securitization pools.
Also, the collateral pool had an average account balance of $1,620, lower than that of credit card securitization trusts that the Big Six banks sponsor, Moody's said.
The assets appear to have a solid credit profile, through, with a single-digit gross charge-off rate of 4.5%, and a rate of 30+ day delinquencies of 3.0%, the rating agency said. The portfolio has a yield of 28.0%, and a monthly payment rate of 23.0%.
Moody's did point out a number of challenges, however. One is its securitization track record, which only goes back about six years. Further Synchrony has a weaker credit outlook as a company compared with most other bank sponsors of credit card ABS, raising the stakes for performance risks.
Another drawback is that the portfolio is relatively unseasoned, Moody's said. At the end of September, only 87% of the trust's receivables belong to cardholder accounts that are at least four years old, the rating agency said.
