DBRS Comments on Changes to Golden Credit Card Trust

DBRS has today commented on recent changes made to Golden Credit Card Trust (Golden or the Trust) on October 30, 2009.

The changes include the following:

(1) THE INCLUSION OF INTERCHANGE: Before the changes, Golden was the only credit card trust in Canada that did not include interchange in the yield available to the Trust. The result of increasing loss rates over the last 12 months experienced by the Trust was a compression of series excess spread to slightly above 4%, the first threshold of a cash reserve event. The inclusion of interchange, which DBRS estimates to be between 5% and 7% (annualized), should bring excess spread to approximately 9% for all outstanding series. This provides a solid first defense against credit losses.

(2) THE INCLUSION OF MASTERCARD ACCOUNTS: Royal Bank of Canada, the originator of credit card receivables for Golden, has begun to offer MasterCard-related products in addition to its large VISA portfolio. DBRS understands that many Canadian credit card issuers are in the process of reviewing the viability of duality (VISA & MasterCard) after the restrictions imposed by the competition bureau were removed in November 2008. While no Canadian credit card issuer has significant dual issuance at the moment, duality provides Canadian card issuers more flexibility and serves as a client retention and revenue generation strategy.

(3) THE INCLUSION OF PARTIAL COMMINGLING CONDITIONS: Golden is the first credit card program in Canada to incorporate DBRS’s partial commingling policy, released on June 23, 2009, for all series. DBRS believes that the partial commingling provisions mitigate potential noteholder losses and also provide clarification to market participants with regard to the collection process if the seller/servicer is financially weakened.

Overall, DBRS considers the above changes positive and believes that they strengthen the transaction structure of the Trust.

Notes:
The applicable methodologies are DBRS Criteria for Canadian Credit Card Securitization and Legal Criteria for Canadian Structured Finance, which can be found on our website under Methodologies.

This is a Structured Finance rating.

Media Contact
Caroline Creighton
Senior Vice President
Communications
Tel. +1 416 597 7317
ccreighton@dbrs.com