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 2016-4 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 2018-4 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 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 June 18, 2021, in its “Global Macroeconomic Scenarios - June 2021 Update” at https://www.dbrsmorningstar.com/research/380281. For the Notes, DBRS Morningstar considered impacts consistent with the moderate scenario in the referenced commentary in its analysis. The rating actions are based on the following factors as of July 2021:

(1) The Notes benefit from excess spread, which has been in the range of 18.3% and 22.1% 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) The average payment rate has been trending upwards at 64.7% as of July 2021 and averaging 58.7% over the past 12 months. The monthly gross yield has remained stable at 24.9% and averaging 24.3% over the past 12 months.

(3) Government provided financial relief and payment relief programs offered by Royal Bank of Canada (RBC) contributed to lower losses. The one-month loss rate remains low and has averaged 1.4% over the past 12 months.

(4) The receivables pool is a well-diversified and seasoned portfolio composed of certain credit card accounts originated, managed, and designated by 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 May 2021.

The performance and characteristics of the receivables pool and the Notes are available and updated each month in DBRS Morningstar’s Monthly Canadian ABS Report. DBRS Morningstar conducts a monthly stress testing of each rated class of the Trust, with the results indicating 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 can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

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

The principal methodology is Master Canadian Structured Finance Surveillance Methodology (June 7, 2021), 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.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

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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