DBRS Morningstar Confirms Ratings of Golden Credit Card Trust

DBRS Limited (DBRS Morningstar) confirmed the ratings of all the outstanding notes (the Notes) issued by Golden Credit Card Trust (the Trust). The confirmation is part of DBRS Morningstar’s continued effort to provide timely credit rating opinions and increased transparency to market participants.

-- Credit Card Receivables-Backed Class A Floating Rate Notes, Series 2016-3 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2016-3 at A (high) (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2016-3 at BBB (high) (sf)

-- Credit Card Receivables-Backed Class A Floating Rate Notes, Series 2016-4 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2016-4 at A (high) (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2016-4 at BBB (high) (sf)

-- Credit Card Receivables-Backed Class A Floating Rate Notes, Series 2017-4 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2017-4 at A (high) (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2017-4 at BBB (high) (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 (high) (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2018-1 at BBB (high) (sf)

-- Credit Card Receivables-Backed Class A Floating Rate Notes, Series 2018-3 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2018-3 at A (high) (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2018-3 at BBB (high) (sf)

-- Credit Card Receivables-Backed Class A Notes, Series 2018-4 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2018-4 at A (high) (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2018-4 at BBB (high) (sf)

-- Credit Card Receivables-Backed Class A Notes, Series 2018-5 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2018-5 at A (high) (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2018-5 at BBB (high) (sf)

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

-- Credit Card Receivables-Backed Class A Floating Rate Notes, Series 2019-2 at AAA (sf)
-- Credit Card Receivables-Backed Class B Notes, Series 2019-2 at A (high) (sf)
-- Credit Card Receivables-Backed Class C Notes, Series 2019-2 at BBB (high) (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 16.4% and 20.3% over the past 12 months, and series-specific cash accounts, which could build up to 5.0% of the Initial Invested Amount. For the AAA (sf) rated and A (high) (sf) rated notes, credit enhancement is also available through subordination of 6.5% and 2.0%, respectively.

(2) Payment deferrals and partial interest rate relief were offered to customers affected by the coronavirus pandemic. Average payment rates declined slightly in Q2 2020 to 49.7% from 51.4% in the 12 months up to March 2020. The monthly gross yield increased to 27.7% in June 2020. This increased the Q2 2020 average to 24.6% compared with 23.1% in the 12 months up to March 2020.

(3) The one-month loss rate remains low and has averaged 2.4% in the 12 months up to June 2020.

(4) The custodial pool is a well-diversified and seasoned portfolio composed of certain credit card accounts originated, managed, and designated by Royal Bank of Canada (RBC). RBC is one of the largest financial institutions in Canada by market capitalization and is rated AA (high)/R-1 (high) with a Stable trend by DBRS Morningstar as of June 2020.

The performance and characteristics of the Trust pool and the Notes are available and updated each month in the Monthly Canadian ABS Report available at www.dbrsmorningstar.com. DBRS Morningstar conducts monthly stress testing of each rated class of the Notes, and the results 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 the 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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