Fitch Affirms American Express Credit Account Master Trust
Key Rating Drivers:
The affirmation is based on continued positive trust performance. Fitch has maintained the Outlook at Positive on the subordinate notes due to the strong trust performance and ability to generate robust excess spread with high breakeven multiples.
Gross yield has remained stable since last year. As of the April 2015 distribution period, the 12-month average gross yield was 20.08%, up 38 basis points from the 12-month average of 19.70% as of the April 2014 distribution period.
Monthly payment rate (MPR), a measure of how quickly consumers pay down credit card debt, has improved over the past year. Currently, the 12-month average is 35.80%, up from 34.44% as of the same period one year ago.
Gross charge-offs have improved over the past year. Currently, the 12-month average is 2.30%, down from 2.67% as of the April 2014 distribution period; 60+ day delinquencies have remained below 1% over the past year.
Fitch runs a cash flow breakeven analysis by applying stress scenarios to 3-, 6-, and 12-month performance metric averages to test whether the trust can withstand stresses and losses commensurate with the current rating level given the available credit enhancement. The variables that Fitch stresses are gross yield, monthly payment rate, gross charge-off, and purchase rate. For further information, please review Fitch's U.S. Credit Card ABS Issuance updates published on a monthly basis.
The affirmations are based on the performance of the trust in line with expectations. The Stable Outlook on the senior notes indicates that Fitch expects the ratings will remain stable for the next one to two years.
Fitch's analysis included a comparison of observed performance trends over the past few months to Fitch's base case expectations for each outstanding rating category. As part of its ongoing surveillance efforts, Fitch will continue to monitor the performance of these trusts.
Rating Sensitivities:
Fitch models three different scenarios when evaluating the rating sensitivity compared to expected performance for credit card asset-backed securities transactions: 1) increased defaults; 2) a reduction in purchase rate, and 3) a combination stress of higher defaults and lower MPR.
Decreasing purchase rate alone has the least impact on rating migration even in the most severe scenario of a 100% decrease in purchase rate. The rating sensitivity to an increase in defaults also does not result in any rating migration in the most severe scenario of a 75% increase in defaults. The harshest scenario assumes stresses to defaults and MPR to occur simultaneously. The ratings would only be downgraded under the severe stress of a 75% increase in defaults and 35% reduction in MPR. To date, the transactions have exhibited strong performance with all performance metrics within Fitch's initial expectations. For further discussion of the sensitivity analysis, please see the new issue report related to one of the transactions listed below.
Fitch has affirmed the following classes and maintained the Outlooks as indicated:
American Express Credit Account Master Trust, Series 2012-1:
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2012-2:
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2012-3:
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2012-4:
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2012-5:
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2013-1:
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2013-2:
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive;
--Class 1 at 'BBB+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2013-3:
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive;
--Class 1 at 'BBB+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2014-1;
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive;
--Class 1 at 'BBB+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2014-2;
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive;
--Class 1 at 'BBB+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2014-4;
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive;
--Class 1 at 'BBB+sf'; Outlook Positive.
American Express Credit Account Master Trust, Series 2014-5;
--Class A at 'AAAsf'; Outlook Stable;
--Class B at 'A+sf'; Outlook Positive;
--Class 1 at 'BBB+sf'; Outlook Positive.
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