Fitch Affirms American Express Issuance Trust II

NEW YORK--()--Fitch Ratings has affirmed the long-term ratings and Outlooks assigned to American Express Issuance Trust II. A list of detailed rating actions follows at the end of this release.

KEY RATING DRIVERS

The affirmation is based on continued positive trust performance. Gross yield has remained stable throughout the past year. As of the February 2014 reporting period, the 12-month average gross yield was 34.41%.

Monthly payment rate (MPR), a measure of how quickly consumers are paying off their credit card balance, has been consistent over the past year. The 12-month average as of February 2014 is 93.74%. American Express Issuance Trust II's MPR is well above the industry average due to the nature of the charge card product coupled with a high concentration of prime borrowers. The Fitch Prime Credit Card Index was 27.25% for the February 2014 reporting period.

Gross charge-offs have remained low throughout the year. The 12-month average is 1.65% as of the February 2014 reporting period. 60+ Day Delinquency levels have also remained at near record lows. As of February 2014, the 12-month average 60+ Day Delinquency Rate is 0.61%. Fitch expects charge-off levels to remain stable in the near term given the high quality of the credit card portfolio.

Fitch runs cash flow breakeven analysis by applying stress scenarios to 3-, 6-, and 12-month performance averages to evaluate the breakeven loss multiples at different rating levels. The performance variables that Fitch stresses are the gross yield, monthly payment rate, gross charge-off, and purchase rates. Fitch's analysis included a comparison of observed performance trends over the past few months to Fitch's base case expectations for each outstanding rating category. As part of its ongoing surveillance efforts, Fitch will continue to monitor the performance of these trusts. For further information, please review the U.S. Credit Card ABS Issuance updates published on a monthly basis.

The affirmations are based on the performance of the trusts in line with expectations. Stable outlook indicates that Fitch expects the ratings will remain stable for the next one to two years.

RATING SENSITIVITIES

Fitch models three different scenarios when evaluating the rating sensitivity compared to expected performance for credit card asset-backed securities transactions: 1) increased defaults; 2) a reduction in monthly payment rate (MPR), and 3) a combination stress of higher defaults and lower MPR.

Increasing defaults and reducing MPR alone have the least impact on rating migration even in the most severe scenario of a 75% increase in defaults. The harshest scenario assumes both stresses in increased charge-offs and reduction to MPR to occur simultaneously. As such, the ratings would only be migrated downward under the severe stress of a 50% increase in defaults and 20% reduction in MPR.

To date, the transactions have exhibited strong performance with all performance metrics within Fitch's initial expectations. For further discussion of our sensitivity analysis, please see the new issue report related to one of the transactions listed below.

Fitch has affirmed the following classes as indicated:

American Express Issuance Trust II Series 2013-1:

--Class A at 'AAAsf'; Outlook Stable;

--Class B at 'A+sf'; Outlook Stable;

--Class C at 'BBBsf'; Outlook Stable.

American Express Issuance Trust II Series 2013-2:

--Class A at 'AAAsf'; Outlook Stable;

--Class B at 'A+sf'; Outlook Stable;

--Class C at 'BBBsf'; Outlook Stable.

Additional information is available at 'www.fitchratings.com'

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24, 2013);

--'Global Credit Card ABS Rating Criteria' (June 7, 2013).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Global Credit Card ABS Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=709356

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=822632

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst:
Jared Kirsch, +1-212-908-0646
Analyst
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Herman C. Poon, +1-212-908-0847
Director
or
Committee Chairperson:
Steven Stubbs, +1-212-908-0676
Senior Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst:
Jared Kirsch, +1-212-908-0646
Analyst
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Herman C. Poon, +1-212-908-0847
Director
or
Committee Chairperson:
Steven Stubbs, +1-212-908-0676
Senior Director
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com