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

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 £285 million of Series 2019-1 Floating Rate Asset Backed Notes (the Series 2019-1 Notes) by NewDay Funding 2019-1 Plc (the Issuer). The issuance was the first issuance by NewDay Cards to make use of compounded daily SONIA as the interest reference rate.

The Series 2019-1 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 2019-1 Notes have been listed on the London Stock Exchange and comprise £149.7 million Class A Notes (rated AAAsf/AAA(sf)), £23.1 million Class B Notes (rated AAsf/AA(high)(sf)), £33.9 million Class C Notes (rated Asf/A(sf)), £42.3 million Class D Notes (rated BBBsf/BBB(sf)), £23.7 million Class E Notes (rated BBsf/BB(sf)) and £12.3 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 Series 2019-1 Notes are the first notes issued under any of NewDay Cards’ securitisation structures to use compounded daily SONIA (in place of LIBOR) as the interest reference rate.  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 co-arranged by Citigroup Global Markets Limited, HSBC Bank plc and NewDay Cards. BNP Paribas, London Branch, Citigroup Global Markets Limited, HSBC Bank plc 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 co-arrangers.