KBRA Assigns Preliminary Ratings to Notes Issued by Continental Finance Credit Card ABS Master Trust, Series 2020-A

NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Continental Finance Credit Card ABS Master Trust, Series 2020-A (“CFCCMT Series 2020-A”), a credit card asset-backed securitization.

CFCCMT Series 2020-A, represents Continental Finance Company’s (“CFC”) fourth term ABS and first master trust issuance. The Notes are collateralized and repaid by a portfolio of revolving general-purpose credit card accounts. CFCCMT Series 2020-A will include a three-year revolving period where no principal payments will be made on the notes unless an Early Amortization Event occurs.

The transaction has initial credit enhancement levels ranging from 42.00% for the Class A notes to 5.55% for the Class C notes. Credit enhancement is comprised of overcollateralization, subordination of junior note classes, the reserve account (if funded after closing), and excess spread. The reserve account is initially 0% and the target is 1% of the current aggregate receivables amount.

CFC is a privately held consumer finance company established in 2005 and provides services to support their general-purpose credit cards program under the Mastercard brand. These services include marketing, underwriting and servicing credit card accounts. CFC has marketed and serviced credit card accounts since March 2006, however, the CFC achieved meaningful scale starting in 2016. CFC is owned directly or indirectly by its founders.

KBRA applied its Global Credit Card ABS Rating Methodology and Global Structured Finance Counterparty Methodology as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA also conducted an operational assessment of CFC, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.

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Related Publications

• Credit Card ABS Global Rating Methodology
• Structured Finance Global Counterparty Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA.