Synchrony Card Issuance Trust is preparing to issue $500 million in asset-backed securities that will be repaid from de-linked receivables with credit card collateral.
Synchrony Bank, a federal savings bank that Synchrony Financial owns, is doing its first issuance of 2023 with this deal, which will issue the notes through just one class of notes, according to data from Asset Securitization Report's deal database.
The collateral pool is made up of private-label, co-branded revolving credit card receivables accounts. SYNIT was upsized from $500 million, even though the seal is still structured around just one tranche of notes, according to the ASR database. The notes have subordination of around 26.0%, according to ratings analysts from Moody's Investors Service, and the notes have a legal final maturity date of July 17, 2029.
BofA Securities, J.P. Morgan Securities, and Mizuho Securities are lead underwriters on the deal.
Moody's counts the servicer, also Synchrony, as a credit strength, based on its experience and track record. The company, Moody's notes, has been securitizing credit card revenues since 1997. As of this transaction's cutoff date, June 30, 2023, Synchrony has managed a credit card portfolio of $89.3 billion, out of which it has sold $7.8 billion in card receivables to SYNIT.
Another plus is the average account in the pool was $1,582 as of the cutoff date. That balance is lower than that of securitization trusts from the Big Six banks.
The deal has a handful of drawbacks from a credit standpoint, as well, Moody's noted. Synchrony has a lower credit quality than most other bank sponsors of credit card securitization trusts in the U.S. Sponsors with weaker credit ratings tend to experience more insolvency and shut down credit card portfolios. Also, only 85% of the trust's receivables belong to cardholder accounts that are at least four years old, as of June 30, 2023.
Moody's and Fitch Ratings expect to assign the notes 'Aaa' and 'AAA', respectively.
