Fitch revises NewDay Partnership VFN series ratings after transaction restructure

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Fitch revises NewDay VFN ratings

Highlights

Fitch upgraded NewDay Partnership Master Issuer Plc VFN P3 V1's class B notes to 'AAsf' and downgraded class C notes to 'Asf' after transaction restructure.
NewDay reduced the advance rate for class B notes and increased it for class C notes, prompting rating changes, and cut class E commitment amounts to zero, withdrawing its rating.
Portfolio charge-off rate averaged 4.3% in the 12 months to January 2026, driven lower by GBP150 million John Lewis Partnership receivables, now 35% of the trust.

Restructuring drives rating changes

As reported by Fitch Ratings, the agency upgraded NewDay Partnership Master Issuer Plc VFN P3 V1's class B notes to 'AAsf' from 'AA-sf', downgraded the class C notes to 'Asf' from 'A+sf' and withdrew the class E notes rating after changes to the transaction structure. The notice is a correction of a release issued on 14 May 2026 that incorrectly described the previous class C notes rating.

The VFN-P3 notes are issued by NewDay Partnership EU Loan Note Issuer S.à r.l. and are backed by a pool of 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 NewDay reduced the advance rate for the class B notes and increased the advance rate for the class C notes, leading to the upgrade and downgrade respectively.

The class E rating was withdrawn after commitment amounts were cut to zero and the debt was cancelled. In addition to series VFN-P2, VFN-P3 and VFN-P4, the structure also uses separate originator variable funding notes held by NewDay Partnership Transferor Plc to provide credit enhancement, dilution protection and support for risk retention requirements.

Portfolio performance and UK trust implications

The portfolio's charge-off rate has settled at an average of 4.3% in the 12 months to January 2026, down from a peak of 7.5% in May 2023. Fitch attributes that improvement to the addition of John Lewis Partnership receivables, which have historically posted very low charge-off rates and prompted the agency to update steady-state assumptions in December 2025.

Fitch has maintained the monthly payment steady state at 30% and the monthly payment rate haircut at 65% at 'AAAsf'. It has also kept principal charge-offs at 6% and the charge-off multiple at 5.5x at 'AAAsf'. John Lewis Partnership receivables now account for about 35% of the trust after GBP150 million of those receivables were added to the master trust in November 2025.

The agency says the changing retailer mix remains a key performance consideration because receivables from new retail agreements or product lines could be added during the life of the transaction, subject to rating confirmation. Fitch also notes that the NewDay group fills several roles including originator, servicer and cash manager, a structure less typical for UK trusts, although it says operational transferability, external service agreements, back-up cash management and amortising liquidity help mitigate that reliance.

Our earlier article on NewDay Partnership EU Loan Note Issuer’s VFN-P3, Sub-Series V1 outlined how amendments to the capital structure triggered a review of the note ratings in the UK credit card ABS market. We noted that the changes reshaped credit enhancement, margin profiles and maturity terms, and that the Class E Notes were effectively reduced to zero with commitments cancelled, prompting the withdrawal of that rating. The review also pointed to performance data supporting the remaining notes’ credit enhancement and a record of timely interest payments.

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