Fitch to Rate Golden Credit Card Trust, Series 2016-5; Presale Issued

NEW YORK--()--Fitch Ratings expects to assign the following ratings and Rating Outlooks to Golden Credit Card Trust, series 2016-5:

--$TBD USD class A asset-backed notes 'AAAsf (EXP)'; Outlook Stable.

--$TBD CAD class B asset-backed notes 'Asf (EXP)'; Outlook Stable;

--$TBD CAD class C asset-backed notes 'BBB+sf (EXP)'; 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 rate on the cards.

Strong Collateral Performance Metric: As of July 2016, Golden Credit Card Trust's (GCCT) collateral performance metrics were in line with the Fitch indices. Charge-offs, 60+ day delinquencies and monthly payment rate have remained relatively stable over the past 24 months. Gross yield has been robust over the past two years.

Adequate Credit Enhancement (CE): The class A notes of each existing series from 2016-5 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% CE 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.

Some of the outstanding subordinate tranches of Golden Credit Card Trust may be able to support higher ratings based on the output of Fitch's proprietary cash flow model. Since the credit card program is set up as a continuous funding program and requires that any new issuance does not affect the rating of existing tranches, the enhancement levels are set to maintain a constant rating level per class of issued notes and may provide more than the minimum enhancement necessary to retain issuance flexibility. Therefore, Fitch may decide not to assign or maintain ratings above the current outstanding ratings in anticipation of future issuances.

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 class A and B. The rest of the stress scenarios are unlikely to impact the ratings.

USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

REPRESENTATIONS, WARRANTIES AND ENFORCEMENT MECHANISMS

A description of the transaction's representations, warranties and enforcement mechanisms (RW&Es) that are disclosed in the offering document and which relate to the underlying asset pool is available by accessing the appendix referenced under "Related Research" below. The appendix also contains a comparison of these RW&Es to those Fitch considers typical for the asset class as detailed in the Special Report titled "Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions," dated May 31, 2016.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 01 Sep 2016)

https://www.fitchratings.com/site/re/886006

Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum (pub. 18 Jul 2016)

https://www.fitchratings.com/site/re/884964

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 17 May 2016)

https://www.fitchratings.com/site/re/879815

Global Credit Card ABS Rating Criteria (pub. 21 Jul 2016)

https://www.fitchratings.com/site/re/885146

Global Structured Finance Rating Criteria (pub. 27 Jun 2016)

https://www.fitchratings.com/site/re/883130

Related Research

Golden Credit Card Trust Series 2016-5 (US ABS)

https://www.fitchratings.com/site/re/887581

Golden Credit Card Trust Series 2016-5 -- Appendix

https://www.fitchratings.com/site/re/887588

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1011543

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1011543

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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
Harry Kohl
Director
+1-212-908-0837
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
John Alberici
Associate Director
+1-212-908-0370
or
Committee Chairperson
Herman Poon
Senior Director
+1-212-908-0847
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Harry Kohl
Director
+1-212-908-0837
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
John Alberici
Associate Director
+1-212-908-0370
or
Committee Chairperson
Herman Poon
Senior Director
+1-212-908-0847
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com