Robinhood Eyes Its First Bond Sale Backed by Credit Card Bills

Robinhood Markets Inc. has begun gauging interest from fixed-income investors in a bond backed by bills for its branded consumer credit cards, according to a person familiar with the matter. The move would represent the brokerage's first asset-backed securities issuance.

The company is looking to sell at least $400 million of asset-backed securities in four parts. Initial price talk on the deal's highest-rated tranche is a premium of approximately 0.8 percentage point over the benchmark. The person, who requested anonymity because they were not allowed to discuss the matter publicly, said the terms could shift based on investor feedback.

Asset-backed securities are a well-established financing tool in which a pool of loans or receivables is used as collateral for bonds. For Robinhood, the pool would consist of unpaid card bills tied to its branded consumer credit card. The notes would be issued in four tranches, or classes, each with a different priority on the cash flows generated from those card payments.

The highest-rated class is initially being offered at a spread of about 0.8 percentage point over the relevant benchmark. That spread is subject to change as the syndication process moves forward, the person said. No final pricing, deal size, or issuance date has been confirmed.

Robinhood has not made a public announcement about the potential deal. The transaction would be the first securitization of credit card receivables for the company, giving it access to capital markets funding for its credit card program.