Slaughter and May advised NewDay Cards on its first SOFR-linked debt issue under its own-brand credit card master trust securitisation

23 Sep 2019

Slaughter and May advised NewDay Cards Ltd (NewDay Cards) and its affiliates in relation to a public debt issue under its own-brand credit card securitisation.

The transaction involved the issuance, through a master trust structure, of $205 million and £151 million of Series 2019-2 Floating Rate Asset Backed Notes (the Series 2019-2 Notes) by NewDay Funding 2019-2 Plc (the Issuer). The issuance was the first issuance by NewDay Cards to make use of compounded daily SOFR as the interest reference rate for the US dollar notes.

The Series 2019-2 Notes are ultimately backed by income from a portfolio of credit card receivables beneficially owned by NewDay Funding Receivables Trustee Ltd (the Receivables Trustee).

The Series 2019-2 Notes have been listed on the London Stock Exchange and comprise $205 million Class A Notes (rated AAAsf (Fitch)/AAA(sf) (DBRS)), £25.7 million Class B Notes (rated AAsf/AA(high)(sf)), £37.8 million Class C Notes (rated Asf/A(sf)), £47.1 million Class D Notes (rated BBBsf/BBB(low)(sf)), £26.4 million Class E Notes (rated BBsf/BB(sf)) and £14.0 million Class F Notes (rated B+sf/B(high)(sf)). The Class A, Class B, Class C and Class D Notes were publicly issued, whilst the Class E and Class F Notes were retained by Newday Funding Transferor Ltd, an affiliate of NewDay Cards.

The Class A Notes have an innovative “reset” feature which allows the Issuer to reset the scheduled redemption date and rate of interest for the Class A Notes. If the Issuer exercises its reset option, the Class A Noteholders have a corresponding put option.

The Class A Notes are the first notes issued under any of NewDay Cards’ securitisation structures (and one of the first issuances by a non-US issuer) to use compounded daily SOFR (in place of US Dollar LIBOR) as the interest reference rate. The other classes of the Series 2019-2 Notes use compounded daily SONIA as the reference rate (in the same manner as NewDay’s most recent debt issuance). This reflects the broader transition away from LIBOR to risk-free rates as the primary interest rate benchmarks in the financial markets.

Under the securitisation structure, the Receivables Trustee has appointed NewDay Cards as servicer in respect of the portfolio. Legal title to the receivables within the portfolio remains with NewDay Ltd, which is an authorised payment institution and a wholly-owned subsidiary of NewDay Cards.

The transaction was arranged by Banco Santander, S.A., BNP Paribas, Bank of America Merrill Lynch and Société Générale S.A., London Branch. NewDay Cards acted as Co-arranger Banco Santander, S.A., BNP Paribas, Bank of America Merrill Lynch and Société Générale S.A., London Branch acted as joint lead managers.

Morgan, Lewis & Bockius UK LLP provided US law advice to NewDay Cards and its affiliates.

Clifford Chance provided English and US law advice to the joint lead managers and the arrangers.

Contacts

Financing: Richard Jones (partner), David Thomas (associate), Ian Luby (associate), Christopher McCabe (associate); Tax: Gareth Miles (partner), Alex Sim (associate); Financial Regulation: Ben Kingsley (partner), Emily Bradley (associate).


List of all recent work