Morningstar DBRS upgrades and confirms NewDay funding note ratings

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Morningstar DBRS upgrades NewDay ratings

Highlights

Morningstar DBRS upgrades several NewDay Funding Master Issuer tranches, notably Series 2023-1 Class B to AAA (sf) and Class C to AA (sf), while confirming lower-rated Class E and F at BB levels.
The rating actions on Series 2023-1, 2024-1, 2024-2, 2024-3, 2025-1, and 2025-2 reflect revised portfolio expectations including charge-off rates, monthly principal payments, and yield rates.
Despite broad structural upgrades indicating stronger credit support, subordinate NewDay Funding notes retain unchanged BB ratings, signaling persistent concentrated risk in lower tranches.

Rating actions across NewDay transactions

As reported by Morningstar DBRS, DBRS Ratings Limited takes credit rating actions on outstanding notes issued by NewDay Funding Master Issuer and NewDay Funding Loan Note Issuer. Across the master issuer programme, the agency confirms a number of Class A notes at AAA (sf) and raises several Class B, Class C and Class D tranches in the 2023-1, 2024-1, 2024-2, 2024-3, 2025-1 and 2025-2 series.

For NewDay Funding Master Issuer, upgrades include Series 2023-1 Class B to AAA (sf) from AA (high) (sf), Series 2023-1 Class C to AA (sf) from A (high) (sf), and Series 2023-1 Class D to A (low) (sf) from BBB (high) (sf). Similar actions extend across later series, while lower-rated Class E and Class F notes are generally confirmed at existing BB category levels.

For NewDay Funding Loan Note Issuer, the VFN-F1 V1 Class A Loan Note remains confirmed at BBB (high) (sf), while the Class E and Class F Loan Notes are also confirmed at BB (high) (sf) and BB (sf), respectively. Morningstar DBRS says the actions reflect revised expectations for the portfolio's charge-off rate, monthly principal payment rate and yield rate.

Implications for UK credit card securitisation

These transactions securitise near-prime credit cards granted to individuals domiciled in the UK by NewDay Ltd. The structures sit within the NewDay Funding-related master issuance platform and operate under common requirements covering servicing, amortisation events, priority of distributions and eligible investments.

NewDay Cards Ltd. serves as the initial servicer for each transaction, with Lenvi Servicing Limited acting as backup servicer. The rating changes indicate stronger credit support or improved performance expectations for parts of the capital structure, while unchanged lower-tranche ratings show that risk remains concentrated in subordinated notes despite the broader upgrades.

Our earlier coverage of the Bank of England’s Prudential Regulation Authority proposals focused on plans to soften trading-book capital requirements and delay full implementation of the Basel III market risk framework until January 2028. We noted the aim was to keep UK rules aligned with the U.S. and EU, ease potential competitive pressure on UK wholesale markets, and reduce the capital burden—especially for banks using internal models.

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