RPT-Fitch: No Rating Impact on DCS Asset Funding Following Amendments
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Feb 28 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings says the ratings of DCS Asset Finding Pte. Ltd. (DCS) will not be affected by amendments to the structure of the transaction, a securitisation of credit card and charge card receivables in Singapore originated by Diners Club (Singapore) Private Limited. The key amendments are:
1. The revolving period and the legal final maturity have been extended to September 2016 from March 2014, and to September 2018 from March 2016 respectively;
2. The working capital facility (WCF) limit has been increased to SGD10m from SGD6m;
3. The annual amortisation requirement for the purposes of the DCS overdraft facility agreement and the Diners overdraft facility agreement has been amended;
4. The dilution reserve of 1.2% of eligible receivables balance has been replaced with a dynamic reserve, subject to a floor of 0.8%;
5. The class A1 notes' coupon has been increased.
Fitch has revisited its base case assumptions for charge-off rate, gross yield and monthly payment rate based on DCS's historical data from February 2002 to September 2013. Credit enhancement (CE) for each class remains commensurate with each note's rating stress.
The performance of the transaction continues to be sound, with the default rate, payment rate and excess spread all within the trigger levels and Fitch's base case assumptions. The three-month average delinquency ratio has been stable at 0.8% since October 2012, well below the transaction trigger of 3%. The three-month average default ratio was at 0.5% in December 2013, versus the transaction trigger of 2%. The three-month average payment rate has been around 19% since October 2012, above the transaction trigger of 15%. The three-month average excess spread, after the absorption of defaults, has been healthy at an average of 0.9% in the past 12 months to December 2013. Fitch's expectations that Singapore's economic growth would be sustainable and the employment rate would remain stable in 2014 further support the transaction performance.
Fitch undertook an on-site originator and servicer review in January 2014, and found DCS's underwriting and servicing capabilities to be satisfactory. The risk arising from extending the revolving period by two and a half years is mitigated by mechanisms such as performance-based early amortisation triggers, Fitch's assumption of a worst mix portfolio for its model analysis, and a review of the agency's base-case assumptions based on the originator's new portfolio data updated to September 2013.
The current ratings are as follows:
WCF 'A-sf'; Outlook Stable
Class A1 notes 'A-sf'; Outlook Stable
Class A2 notes 'A-sf'; Outlook Stable
Class B notes 'BBBsf'; Outlook Stable
Class C notes 'BBsf'; Outlook Stable
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