NewDay Partnership notes see mixed Fitch rating actions after restructuring

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NewDay Fitch rating actions

Highlights

Fitch upgrades NewDay's class B notes to 'AAsf' from 'AA-sf' and downgrades class C to 'Asf' from 'AA-sf' after advance rate restructurings, with all Outlooks remaining Stable.
Charge-off rates in NewDay's underlying portfolio improved to 4.3% for the 12 months to January 2026 from a 7.5% peak in May 2023, driven by GBP150 million of John Lewis Partnership receivables now representing 35% of the trust.
Fitch highlights ongoing operational and retailer concentration risks due to NewDay group serving as originator, servicer, and cash manager, partly mitigated by structural protections and agreements with external card service providers.

Structure changes reshape note ratings

As reported by Fitch Ratings, NewDay amends the advance rates for VFN P3 V1 by lowering the rate for class B notes and increasing it for class C notes, driving the upgrade of class B to 'AAsf' from 'AA-sf' and the downgrade of class C to 'Asf' from 'AA-sf'. All Outlooks are Stable.

The class E rating is withdrawn because commitment amounts are reduced to zero and the debt is cancelled. The VFN-P3 notes are issued by NewDay Partnership EU Loan Note Issuer S.à r.l. and are backed by UK co-branded credit card, store card and instalment credit receivables originated by NewDay Ltd and beneficially held by NewDay Partnership Receivables Trustee Ltd.

Fitch says the structure also includes separate originator variable funding notes held by NewDay Partnership Transferor Plc, which provide credit enhancement to the rated notes, add dilution protection and address risk retention requirements. The agency keeps its steady-state assumptions and stress levels unchanged from December 2025, including a 30% monthly payment steady state and a 6% principal charge-off assumption at 'AAAsf'.

Portfolio mix shifts UK consumer credit risk profile

The underlying portfolio shows improving performance, with the charge-off rate settling at an average of 4.3% in the 12 months to January 2026, down from a peak of 7.5% in May 2023. Fitch links that improvement to the addition of John Lewis Partnership receivables, which now make up about 35% of the trust after GBP150 million of receivables are added in November 2025.

Fitch says the JLP portfolio behaves like a typical prime credit card book, but it also highlights the risk that future receivables from new retail agreements or product lines could alter the retailer mix over time. Because customer demographics at each retailer remain a key performance driver, the agency bases its steady-state assumptions on a changing composition rather than expecting full equalisation across retailers.

The agency also flags operational concentration within the NewDay group, which serves as originator, servicer and cash manager, unlike many other UK trusts that rely on larger institutions with stronger credit profiles. Fitch says that risk is partly mitigated by transferability of operations, agreements with established card service providers, a back-up cash management agreement and series-specific amortising liquidity, but retailer concentration remains a central consideration for the securitisation.

Our earlier coverage of Fitch’s rating action on BA Credit Card Trust 2026-1 discussed how the Class A notes were assigned a Stable Outlook, supported by collateral performance that remained broadly in line with the agency’s indices as of the March 2026 collection period. We highlighted key metrics including charge-offs, 60+ day delinquencies, yield and payment rate trends, alongside the role of credit enhancement and structural protections in underpinning the rating.

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