NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns the following ratings to Golden Credit Card Trust, series 2016-2:
--$1,051,875,000 CAD class A asset-backed notes 'AAAsf'; Outlook Stable;
--$50,625,000 CAD class B asset-backed notes 'Asf'; Outlook Stable;
--$22,500,000 CAD class C asset-backed notes 'BBB+sf'; Outlook Stable.
KEY RATING DRIVERS
High Collateral Quality: The underlying collateral characteristics play a vital role in the performance of a credit card ABS transaction. Fitch closely examines such collateral characteristics as credit quality, seasoning, geographic concentration, delinquencies and utilization rates.
Strong Collateral Performance Metric: As of January 2016, Golden Credit Card Trust's (GCCT) collateral performance metrics were in line with the Fitch indices. Chargeoffs and 60+ day delinquencies have remained relatively stable over the past 24 months, and the monthly payment rate has remained consistent since the inception of the trust. Gross yield has been robust over the past two years.
Adequate Credit Enhancement (CE): The class A notes of each existing series from 2016-2 will benefit from 6.50% CE derived through the subordination of both class B and class C notes and the cash reserve account.
The class B notes will benefit from 2.00% credit enhancement derived through the subordination of class C notes and the cash reserve account.
The class C notes' CE is based solely on the cash reserve account.
Quality Servicing Capabilities: Royal Bank of Canada (RBC) is an effective servicer, as evidenced by historical delinquency and loss performance of securitized receivables. Deterioration in the credit quality of RBC may affect the performance of the collateral pool backing the notes.
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.
The harshest stress scenario of a combined 75% increase to defaults and a 35% reduction of MPR could lead to a two-notch downgrade for classes A and B. The rest of the stress scenarios are unlikely to impact the ratings.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.
The publication of a RW&Es appendix is not required for this transaction.
Additional information is available at www.fitchratings.com
Applicable Criteria
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158
Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum (pub. 14 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744175
Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 19 Dec 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868
Global Credit Card ABS Rating Criteria (pub. 26 Jun 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867482
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952
Additional Disclosures
Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=998398
Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998398
Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31
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