OREANDA-NEWS. March 12, 2015. Fitch Ratings has assigned NewDay Partnership Funding 2015-1Plc's notes final ratings as follows:

GBP185.3m Series 2015-1 A: 'AAAsf'; Outlook Stable
GBP22.5m Series 2015-1 B: 'AAsf'; Outlook Stable
GBP14.0m Series 2015-1 C: 'A-sf'; Outlook Stable
GBP10.1m Series 2015-1 D: 'BBBsf'; Outlook Stable
GBP6.9mSeries 2015-1 E: 'BBsf'; Outlook Stable
GBP5.5m Series 2015-1 F: 'Bsf'; Outlook Stable

The transaction is a securitisation of UK credit card, store card and instalment loan receivables originated by NewDay Ltd. The receivables arise under a number of retail agreements, but active origination currently takes place mostly for co-branded credit cards under agreements with Debenhams, the Arcadia Group, House of Fraser and Laura Ashley. NewDay acquired the portfolio and the related servicing platform in 2013 from Santander UK plc.

Fitch has also affirmed NewDay Partnership Funding 2014-1Plc and NewDay Partnership Loan Note Issuer Ltd's notes. A full list of these is below.

KEY RATING DRIVERS
Good Asset Performance
The charge-off, delinquency and payment rate performance of the combined pool has historically been in line with prime UK credit cards. There are notable differences between the three main product groups, and one-time effects from legacy retailer agreements, which make forming single steady-state assumptions challenging. Furthermore, active origination is only taking place under four retail agreements at the moment, making the key performance indicators for the whole pool subject to run-out effects of various closed books.

Fitch defined a charge-off steady state assumption of 8%, while the monthly payment rate (MPR) steady state is set at 19%.

Shift in Portfolio Composition
The originations under the four currently active retailer agreements (Debenhams, House of Fraser, Arcadia Group and Laura Ashley - the open book) have come to dominate trust performance. Receivables originated under new retail agreements may also be added to the trust within the life of the transaction. Adding receivables linked to a new retailer is subject to rating confirmation.

In Fitch's opinion, the customer demographic that is characteristic of a given retailer will be the key performance driver of the related receivables. While clearly outlined and implemented credit guidelines combined with a state of the art scoring model minimise this risk, in Fitch's view, it can never be entirely mitigated. Furthermore, fully levelling the performance between retailers is unlikely to be in the commercial interests of the originator. Therefore, Fitch derived its steady state assumptions on the basis of a changing retailer mix.

Variable Funding Notes (VFN)
In addition to Series 2014-VFN providing the funding flexibility that is typical and necessary for credit card trusts, the structure employs a separate "Originator VFN" purchased and held by NewDay Partnership Transferor Plc. This serves three main purposes: to provide credit enhancement to the rated notes, to add protection against dilution by way of a separate functional transferor interest and to serve the minimum retention requirements.

Unrated Originator and Servicer
The NewDay group acts in a number of capacities through its various entities, most prominently as originator and servicer, but also as cash manager to the securitisation. In most other UK trusts these roles are fulfilled by large institutions with a strong credit profile. The degree of reliance in this transaction is mitigated by the transferability of operations, agreements with established card service providers, a back-up cash management agreement and a non-amortising liquidity reserve per series.

Retail Partners Drive Risk
In addition to a changing portfolio composition there is also the risk of retailer concentration. Independently of cardholders' credit characteristics, card utility and, as a result, receivables performance is substantially linked to the perceived attractiveness of the continued use of the card. This applies more to store cards than credit cards. In setting its assumptions, Fitch considered this potentially higher stress on the portfolio.

Steady Asset Outlook
Fitch expects UK credit card performance will be stable, with only limited up-ticks in delinquency and charge-off levels throughout 2015 as the current levels are unsustainable in the long term. Payment rates and yields are expected to remain stable in 2015 but there is still no clarity on how lenders reliant on interchange to fund their reward programmes will replace the loss of this income source (Credit Card Index - UK 1Q15).

RATING SENSITIVITIES
Rating sensitivity to increased charge-off rate
Increase charge-off rate base case by 25% / 50% / 75%

Series 2015-1 A: 'AA+sf' / 'AAsf' / 'AA-sf'
Series 2015-1 B: 'AA-sf' / 'A sf' / 'BBB+sf'
Series 2015-1 C: 'A-sf' / 'BBB sf' / 'BB+sf'
Series 2015-1 D: 'BB+sf' / 'BBsf' / 'BB-sf'
Series 2015-1 E: 'BB-sf' / 'B sf' / 'B-sf'
Series 2015-1 F: 'B-sf' / 'CCC sf' / 'C sf'

Rating sensitivity to reduced MPR
Reduce MPR base case by 15% / 25% / 35%

Series 2015-1 A: 'AA+sf' / 'AAsf' / 'AA-sf'
Series 2015-1 B: 'A+sf' / 'Asf' / 'A-sf'
Series 2015-1 C: 'BBB+sf' / 'BBBsf' / 'BBB-sf'
Series 2015-1 D: 'BBB-sf' / 'BB+sf' / 'BBsf'
Series 2015-1 E: 'BBsf' / 'BB-sf' / 'B+sf'
Series 2015-1 F: 'Bsf' / 'Bsf' / 'B-sf'

Rating sensitivity to reduced purchase rate (ie aggregate new purchases divided by aggregate principal repayments in a given month)
Reduce purchase rate base case by 50% / 75%

Series 2015-1 A: 'AAAsf' / 'AAAsf'
Series 2015-1 B: 'AA-sf' / 'A+sf'
Series 2015-1 C: 'A-sf' / 'BBB+sf'
Series 2015-1 D: 'BBB-sf' / 'BB+sf'
Series 2015-1 E: 'BB-sf' / 'B+sf'
Series 2015-1 F: 'Bsf' / 'CCCsf'

NewDay Partnership Funding 2014-1Plc and NewDay Partnership Loan Note Issuer Ltd's notes have been affirmed as follows:

GBP222.3m Series 2014-1 A: 'AAAsf'; Outlook Stable
GBP27.0m Series 2014-1 B: 'AAsf'; Outlook Stable
GBP16.8m Series 2014-1 C: 'A-sf'; Outlook Stable
GBP12.6m Series 2014-1 D: 'BBBsf'; Outlook Stable
GBP7.8m Series 2014-1 E: 'BBsf'; Outlook Stable
GBP6.6m Series 2014-1 F: 'Bsf'; Outlook Stable
GBP175.0m Series 2014-VFN: 'BBBsf; Outlook Stable