Consumer ABS adapts to an environment where total U.S. household debt reaches a record high of $17.06 trillion, while observers say credit performances could reach pre-pandemic levels by 2024.

Total credit enhancement on the notes amounts to 13.50% and 7.00% on the senior and subordinate classes of notes, respectively.

Synchrony has a lower credit quality than most other bank sponsors of credit card securitization trusts in the U.S., but the average account balance is lower, too.

In the April 2023 collection period, 60 days-plus net chargeoffs and delinquencies of rose to 2.91% and 1.26%, respectively.

Rising interest rates on loans, greater borrowing and higher fees on deposit accounts all contributed to the increase. "Altogether, this paints a picture of debt that could really start to strain the checkbooks of American families," said Meghan Greene, a researcher at the nonprofit organization that authored the report.

The current deal, BA Credit Card Trust Class A, 2023-1, has 31.75% in credit support provided by the B, C and D certificates.

The deal will issue two series of notes, 2023-1 and 2023-1 from the master trust. Both series will issue classes A and B notes, but in both cases only the class A notes will be publicly offered.

Delinquency rates in credit cards, auto and personal loans are effectively back to normal after three years of unusually strong credit performance. Industry executives say the current situation is easily manageable, but they do anticipate that key metrics will continue to worsen.

The current ABS pool is more heavily weighted toward large balances. Accounts with balances of $10,000 or more account for 49.9% of the pool.

Despite some signs of weaker performance, metrics remain within manageable levels, and credit enhancement appears to be sound.