Bangkok--1 Sep--Fitch Ratings
Fitch Ratings (Thailand) Limited has today affirmed the National ratings of all debentures issued by Eternal Credit Card Special Purpose Vehicle Company Limited (ECC), Eternal 3 Special Purpose Vehicle Company Limited (Eternal 3) and Eternal 4 Special Purpose Vehicle Company Limited (Eternal 4), and assigned Loss Severity (LS) Ratings, as follows:
ECC:
THB1.0bn Class A-2 (due November 2011) affirmed at ‘AAA(tha)’; Outlook Stable; LS rating assigned at ‘LS-2’
Eternal 3:
THB500m Class A-2 (due March 2013) affirmed at ‘AAA(tha)’; Outlook Stable; LS rating assigned at ‘LS-2’
THB120m Class B (due March 2013) affirmed at ‘AA(tha)’; Outlook Stable; LS rating assigned at ‘LS-3’
THB160m Class C (due March 2013) affirmed at ‘A(tha)’; Outlook Negative; LS rating assigned at ‘LS-3’
Eternal 4:
THB1.5bn Class A-1 (due October 2012) affirmed at ‘AAA(tha)’; Outlook Stable; LS rating assigned at ‘LS-2’
THB500m Class A-2 (due October 2014) affirmed at ‘AAA(tha)’; Outlook Stable; LS rating assigned at ‘LS-2’
THB205m Class B (due October 2014) affirmed at ‘AA(tha)’; Outlook Stable; LS rating assigned at ‘LS-4’
The rating affirmations reflect all three transactions’ ability to maintain the levels of credit enhancement (CE) commensurate with the respective ratings, despite the deterioration in the performance of the portfolios. Fitch monitors three key parameters - yield and excess spread, default rate and monthly payment rate (MPR) - for credit card transactions. Yield and excess spread as well as default rate of all three transactions have performed within Fitch’s base case assumptions since closing while the performance of MPR for ECC and Eternal 3 has been below the agency’s base case assumptions. However, Fitch believes that the expected CE levels and the satisfactory performance of yield and excess spread as well as default rate of these two transactions should be sufficient to offset the weak MPR performance.
All debentures, except Eternal 3’s class C debentures, have Stable Outlooks, based on the expectation that the CE levels of those debentures should remain sufficient to maintain their existing ratings, despite the weak economic environment and prolonged political instability. Meanwhile, the Negative Outlook of Eternal 3’s class C debentures reflects the agency’s concerns regarding the impact of the prolonged weak economy on this junior tranche, which has a lower tolerance to stressed economic conditions.
ECC’s class A-2 debentures are in their controlled accumulation period (with an outstanding THB250m in the debentures’ accumulation account) while all other debentures are within their respective revolving periods. ECC’s principal payment rate has been approaching the early amortisation trigger level (latest 3-month average of 13.2% compared to the trigger level of below 13%), although Fitch considers the start of the early amortisation period is likely to increase the CE level of the transaction. It should be noted that Fitch’s ratings do not reflect the likelihood of the early amortisation event, and the level of CE will not influence the probability of early amortisation.
These three transactions, issued between 2005 and 2007, are securitisations of credit card receivables originated by Aeon Thana Sinsap (Thailand) Public Company Limited, a Thai consumer finance operator currently rated ‘BBB+(tha)’/Stable/‘F2(tha)’.
The rating addresses timely payment of interest and ultimate repayment of principal of the debentures by their legal final maturity.
Rating Outlooks have been published for all newly issued Asia Pacific Structured Finance tranches since June 2008, and concurrently with rating actions for tranches issued prior to June 2008. Unlike a Rating Watch, which notifies investors that there is a reasonable probability of a rating change in the short term as a result of specific event, Rating Outlooks indicate the likely direction of any rating change over a one-to-two-year period.
LS criteria were published on 17 February 2009. For further details please see ‘Criteria for Structured Finance Loss Severity Ratings’, available at www.fitchratings.com
Copies of surveillance reports will be available on the agency’s websites, www.fitchratings.com andwww.fitchratingsasia.com.
Contacts: Orawan Karoonkornsakul, Pramook Malasitt, Vincent Milton, Bangkok, +662 655 4755.