KBRA Assigns Preliminary Ratings to Mercury Financial Credit Card Master Trust, Series 2021-1

·4 min read

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of notes that will be issued from Mercury Financial Credit Card Master Trust, Series 2021-1 ("MFCCMT 2021-1"), a credit card asset-backed securities transaction. The ratings reflect the initial credit enhancement levels ranging from 33.25% for the Class A notes to 5.00% for the Class D notes. Credit enhancement on the notes consists of i) subordination (except for the class D notes) ii) excess spread generated by the pool of credit card receivables and iii) a reserve account (if funded after the closing date).

The Notes of MFCCMT 2021-1 are collateralized and repaid by a portfolio of revolving general-purpose credit card accounts. The accounts were originated through either the Mercury Financial Program or were acquired from a Delaware banking corporation. MFCCMT 2021-1 will include a two-year revolving period where no principal payments will be made on the notes unless an Early Amortization Event occurs. Receivables in MFCCMT 2021-1 are generated by accounts owned by First Bank & Trust. Wilmington Trust, National Association will be the backup servicer.

As of the January 31, 2021 Information Date, accounts in the MFCCMT 2021-1 transaction had a weighted average FICO Score of 668, APR of 22.4%, active credit line of $3,769, seasoning of 79 months, average balance on active accounts of approximately $2,428 and an average utilization rate on all active accounts of 64.4%.

MFCCMT 2021-1, represents the Mercury Financial LLC’s ("Mercury Financial") (formerly known as CreditShop LLC) inaugural securitization issued from their master trust program. Mercury Financial previously issued four private securitizations issued from discrete trusts. Mercury Financial intends to use the proceeds from the sale of the Series 2021-1 Notes to redeem the notes from a prior securitization, CreditShop Credit Card Company 2019-1.

KBRA applied its Global Credit Card ABS Rating Methodology and Global Structured Finance Counterparty Methodology as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA also conducted an operational assessment of Mercury Financial, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

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Related Publications

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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