Golden Credit Card Trust Series 2019-1 Class A Notes Assigned Preliminary Rating

OVERVIEW
  • Golden Credit Card Trust's series 2019-1 note issuance is an ABS transaction backed by an ownership interest in a revolving pool of Canadian dollar-denominated MasterCard and VISA credit card receivables generated by personal and small business accounts originated by Royal Bank of Canada.
  • We assigned our preliminary ratings to the class A notes.
  • The preliminary rating reflects our view of the transaction's credit support, payment structure, cash flow mechanics, and legal structure, among other factors.
 
TORONTO (S&P Global Ratings) Jan. 11, 2019--S&P Global Ratings today assigned 
its preliminary rating to Golden Credit Card Trust's credit card 
receivables-backed fixed-rate series 2019-1 class A notes (see list).

The note issuance is an ABS transaction backed by an ownership interest in a 
revolving pool of Canadian dollar-denominated MasterCard and VISA credit card 
receivables generated by personal and small business accounts originated by 
Royal Bank of Canada.

The preliminary rating is based on information as of Jan. 10, 2019. Subsequent 
information may result in the assignment of final ratings that differ from the 
preliminary ratings.

The preliminary rating reflects: 
  • Our view of the proposed 6.5% credit support provided by the subordinated class B and C notes, which we believe is sufficient to withstand the simultaneous stresses we apply to our 4.0% base-case loss rate, 30.0% base-case payment rate, and 15.0% base-case yield assumptions for the collateral. In addition, we used stressed excess spread and purchase rate assumptions to assess whether, in our opinion, the proposed credit support is commensurate with the preliminary 'AAA (sf)' rating on the class A notes. All of the stress assumptions outlined above are based on our current criteria and assumptions for Canadian credit card securitizations (see "General Methodology And Assumptions For Rating Canadian Credit Card ABS," published March 22, 2012).
  • Our expectation that under a moderate ('BBB') stress scenario, all else being equal, our rating on the class A notes will remain within one rating category of the assigned preliminary 'AAA (sf)' rating during the next 12 months, based on our credit stability criteria (see "Methodology: Credit Stability Criteria," published May 3, 2010).
  • Our view that the 7% minimum seller's interest in our stress scenarios is sufficient to absorb dilutions (noncash reductions) in the receivables, including potential set-off rights of cardholders against deposits with the seller but excluding potential set-off rights resulting from judgments or settlements under certain class action proceedings.
  • Our view of the credit risk that is inherent in the collateral loan pool, based on our economic forecast, the master trust portfolio's historical performance, and the collateral characteristics.
  • Our view of Royal Bank of Canada's (RBC's; AA-/Stable/A-1+) servicing experience and our opinion of its account origination, underwriting, account management, collections, and general operational practices.
  • Our expectation of the timely interest and ultimate principal payments by the Jan. 15, 2023, prescription date, based on stressed cash flow modeling scenarios using assumptions that are commensurate with the preliminary 'AAA (sf)' rating.
  • The transaction's proposed payment structure, cash flow mechanics, and legal structure.
  • The swap agreement provided by RBC, which mitigates the currency and interest rate risk between the Canadian dollar-denominated collateral and U.S. dollar-denominated class A notes. In rating this transaction, we will review the swap documentation for consistency with our counterparty criteria for 'AAA' rated transactions (see "Counterparty Risk Framework Methodology And Assumptions" published June 25, 2013).