Discover Card Execution Note Trust Class A(2019-1) Notes Assigned Rating

OVERVIEW
  • Discover Card Execution Note Trust's issuance is an ABS transaction backed by undivided investor interest in Discover Card Master Trust I's series 2007-CC collateral certificate, which is collateralized by receivables generated from designated Discover Card accounts.
  • We assigned our 'AAA (sf)' rating to the class A(2019-1) notes.
  • The rating reflects our view of the transaction's credit support, inherent credit risk, and underlying payment structure, among other factors.
 
NEW YORK (S&P Global Ratings) Feb. 1, 2019--S&P Global Ratings today assigned 
its 'AAA (sf)' rating to Discover Card Execution Note Trust's class A(2019-1) 
fixed-rate DiscoverSeries notes (see list).

The note issuance is an asset-backed securities transaction backed by 
undivided investor interest in Discover Card Master Trust I's series 2007-CC 
collateral certificate, which is collateralized by receivables generated from 
designated Discover Card accounts.


The rating reflects: 
  • Our view of the 21.0% credit support provided by the subordinated class B, C, and D notes, which we believe is sufficient to withstand the simultaneous stresses we apply to our 5.0% base-case loss rate, 18.0% base-case payment rate, 16.0% base-case yield, and 2.0% purchase-rate assumptions for the notes. In addition, we used stressed excess spread and note interest rate assumptions to assess whether, in our opinion, sufficient credit support is available for the notes. All of the stress assumptions outlined above are based on our current criteria and assumptions (for more information, see "U.S. Credit Card Securitizations: Methodology And Assumptions," published Aug. 24, 2017).
  • Our view that the 7% minimum seller's interest is sufficient in our stress scenarios to absorb dilutions or noncash reductions in the receivables.
  • Our expectation that under a moderate ('BBB') stress scenario, all else being equal, the rating on the class A(2019-1) notes will remain within one rating category of the assigned 'AAA (sf)' rating in the next 12 months, based on our credit stability criteria (see "Methodology: Credit Stability Criteria," published May 3, 2010).
  • Our view of the inherent credit risk in the collateral loan pool based on our economic forecast, the master trust portfolio's historical performance, the collateral characteristics, and vintage performance data.
  • Our view of Discover Bank's (BBB/Stable/--) servicing experience and our opinion of its account origination, underwriting, account management, collections, and general operational practices.
  • Our expectation of timely periodic interest and principal payments by the final maturity date according to the transaction documents, based on stressed cash flow modeling scenarios using assumptions commensurate with the assigned rating.
  • Our view of the notes' underlying payment structure, cash flow mechanics, and legal structure.
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