DBRS Morningstar Confirms Ratings on Eagle Credit Card Trust

DBRS Limited (DBRS Morningstar) confirmed its ratings on all outstanding Notes (the Notes) issued by Eagle Credit Card Trust (the Trust) as follows:

-- Credit Card Receivables-Backed Class A Notes, Series 2015-1 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2015-1 at A (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2015-1 at BBB (sf)

-- Credit Card Receivables-Backed Class A Notes, Series 2017-1 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2017-1 at A (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2017-1 at BBB (sf)

-- Credit Card Receivables-Backed Class A Notes, Series 2018-1 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2018-1 at A (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2018-1 at BBB (sf)

-- Credit Card Receivables-Backed Class A Notes, Series 2019-1 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2019-1 at A (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2019-1 at BBB (sf)

DBRS Morningstar initially published its outlook on the Coronavirus Disease (COVID-19) pandemic’s impact on key economic indicators for the 2020–22 time frame in April 2020. DBRS Morningstar last updated the macroeconomic scenarios on July 22, 2020, in its “Global Macroeconomic Scenarios: July Update” at https://www.dbrsmorningstar.com/research/364318/global-macroeconomic-scenarios-july-update. For the rated Notes, DBRS Morningstar considered impacts consistent with the moderate scenario in the referenced commentary in its analysis. The rating confirmations are based on the following factors, each of which includes additional analysis and, where appropriate, additional stresses to expected performance as a result of global efforts to contain the spread of the coronavirus pandemic:

(1) The Notes benefit from excess spread, which has been in the range of 15.2% to 18.6% over the last 12 months, and the series-specific reserve account, which could build up to 5.0% of the Invested Amount if the three-month excess spread falls below 2.0%.

(2) For the AAA (sf)-rated Class A Notes and the A (sf)-rated Class B Notes, credit enhancement is also provided by subordination of 7.0% and 3.5%, respectively.

(3) Payment rates and gross yield are among the highest in Canada and remain strong. Payment deferrals offered to customers affected by the coronavirus pandemic led average payment rates to decline slightly in Q2 2020 to 56.8% from 58.8% in the 12 months before March 2020. Similarly, partial interest rate relief offered to some customers during the deferral period combined with lower card usage led to a slightly lower gross yield of 24.4% in Q2 2020 compared with 24.9% in the 12 months before March 2020.

(4) The annualized monthly loss rate remains stable averaging 3.3% over the past year.

The performance and characteristics of the custodial pool and the Notes are available and updated each month in the Monthly Canadian ABS Report. DBRS Morningstar conducts a monthly stress testing of each rated class of the Trust, the results of which indicate that simultaneous declines in yield and payment rates and increases in losses would not result in a failure of the Trust to repay the Notes on a timely basis. The severity of the tests applied is commensurate with the respective ratings of the Notes.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is Master Canadian Structured Finance Surveillance Methodology (June 28, 2019),
which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at [email protected].

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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