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Robinhood Explores First Sale of Bonds Backed by Credit Card Debt, Report Says
Robinhood Markets Inc. is gauging investor interest for its first bond offering backed by credit card payments, a move to raise capital from its growing consumer finance division, according to a Bloomberg report published Monday.
The Proposed Deal
The fintech company is reportedly seeking to sell at least $400 million in asset-backed securities (ABS), with the potential for the deal to reach $500 million. The offering is structured into four parts, or tranches, to appeal to investors with different risk appetites.
Initial price discussions for the most senior, highest-rated portion of the deal suggest a premium of approximately 0.8 percentage points over a benchmark rate. The sale is being managed by financial institutions Wells Fargo & Co. and Barclays Plc, according to the report.
AdStrategic Expansion into Credit
This potential debt sale marks a significant step in Robinhood's strategy to diversify its revenue streams beyond its well-known stock trading platform. By securitizing its credit card receivables, the company can convert future revenue into immediate cash for funding its operations and growth.
The move follows Robinhood's deeper push into the credit card market. In March, the company announced a premium platinum card aimed at competing with established players like American Express, two years after launching its no-fee Gold Card. According to a note from Fitch Ratings cited in the report, the underlying credit card accounts are owned by Coastal Community Bank.