Fitch Affirms KB Kookmin Card at 'AAAsf'; Outlook Stable

Fri Jun 20, 2014 12:15am EDT

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(The following statement was released by the rating agency) BANGKOK/HONG KONG, June 20 (Fitch) Fitch Ratings has affirmed KB Kookmin Card First International Ltd. The transaction is a securitisation of credit-card receivables in South Korea originated by KB Kookmin Card Co., Ltd. (KB Card), which also acts as the servicer of the transaction. The rating action is as follows: USD300m floating-rate notes due November 2015 affirmed at 'AAAsf'; Outlook Stable Key Rating Drivers The affirmation reflects Fitch's view that the performance of the underlying assets has remained well within expectations, and that credit enhancement (CE) is sufficient to support the current rating. The transaction has entered into a six-month controlled amortisation period since the end of May 2014. CE should increase over the next six months as the outstanding notes are sequentially amortised. Monthly payment rates have been stable at above 60%, and delinquencies have been mostly below 0.2%. Improved economic growth and low unemployment rates in South Korea have continued to support the underlying transaction, despite high household debt levels. Fitch expects delinquencies to remain stable, supported by a favourable product mix that emphasises lower-risk card receivables. The riskier cash-advance and revolving cash-advance products have declined as percentages of the eligible pool balance from levels at closing. The eligibility criteria Fitch uses to assess the underlying pool and the agency's conservative base-case assumptions show the transaction has sufficient protection for the current rating. This is reflected in the Stable Outlook. According to the May 2014 servicer report, the three-month rolling average delinquency ratio was 0.17%, well below the transaction's 2% early amortisation trigger. The three-month average annualised net yield was 5.86%. The three-month average payment rate was 63.81%, well above the transaction's trigger of 45%. The originator is one of the three card companies in South Korea impacted by the leakage of credit-card holder personal information in January 2014. Regulatory restrictions prevented the originator from acquiring new card members between February and May 2014. However, the restriction did not impact the securitised card accounts. Fitch does not expect the recent incident to have significant impact on the securitised portfolio. The receivable pool balance has remained fairly stable since the incident, and asset performance has not deteriorated. Rating Sensitivities Fitch has used two different scenarios to evaluate the rating sensitivities of the rated notes: 1) increased defaults; and 2) a reduction in monthly payment rate (MPR). Assuming the current product mix, the payment rate and the net yield of the portfolio remain unchanged from the levels reported in the May 2014 servicer report, an increase of annualised default rate to above 28% may lead to a downgrade of the transaction. Assuming the current product mix, the annualised default rate and the net yield of the portfolio remain unchanged from current levels, a decrease of MPR to below 21% may lead to a downgrade of the transaction. The initial key rating drivers and rating sensitivities are explained in the New Issue report dated 2 September 2011, available at www.fitchratings.com. Contacts:

Lead Surveillance Analyst James Leung Director +852 2263 9912 Fitch (Hong Kong) Limited 2801, Tower Two, Lippo Centre 89 Queensway Hong Kong Committee Chairperson Helen Wong Senior Director +852 2263 9934 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available at www.fitchratings.com. The sources of information used to assess these ratings were the servicer, KB Card and the trustee, Citibank Korea Inc. The issuer has informed Fitch that not all relevant underlying information used in the analysis of the rated notes is public. Applicable criteria, "Global Credit Card ABS Rating Criteria", dated 30 May 2014; "Global Structured Finance Rating Criteria", dated 20 May 2014; "Counterparty Criteria for Structured Finance and Covered Bonds", dated 14 May 2014; and "Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum", dated 14 May 2014, are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Credit Card ABS Rating Criteria here Global Structured Finance Rating Criteria here Counterparty Criteria for Structured Finance and Covered Bonds here Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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