General non-prime card accounts to secure Continental Finance deal

General non-prime card accounts to secure Continental Finance deal

Continental Finance Company is preparing to sponsor a $210 million credit card securitization deal secured by a pool of credit card accounts expanded to customers with non-prime credit scores and so-called thin credit records.

The transaction, Continental Finance Credit Card ABS Master Trust, Series 2022-A, is the company’s sixth-term asset-backed securities (ABS) deal, and the master trust’s fifth. A portfolio of general-purpose revolving credit card accounts will back the deal, called the CFCCMT, Series 2022-A, according to Kroll Bond Rating Agency.

The Bank of Missouri and Celtic Bank Corporation founded the accounts, which operate under the Mastercard brand. There are over a million accounts in the transaction, with an average balance of $648 and an interest rate of 27.9%.

On a weighted average (WA) basis, the collateral is 19 months old and has a non-zero WA Vantage Score of 600. As of June 30, credit card accounts in the CFCC Master Trust have a non-zero WA Vantage Score of 600, which in is in fact lower than the Vantage Score of 602 among accounts at the level of Continental Finance companies. KBRA also noted that the accounts have an annual income of $52,372, on a WA basis.

KBRA noted some mixed credit benefits on the notes, based on Continental Credit’s internal credit rating. The company has been using its own credit scores since 2009 and implemented a new model, the M6, in 2016. That credit scoring method took advantage of actual defaults and delinquencies experienced in the managed credit card portfolio. The managed portfolio has performed well, but with data dating back only to 2016, the data series is limited.

Account holders in the master trust show other signs of non-prime credit. According to the KBRA, outstanding balances have increased by 81% in the past twelve months. Balances in the trust have disproportionately high WA balances, $648, relative to their available lines of credit, $947.

Back1 of 2

Leave a Comment

Your email address will not be published.