OREANDA-NEWS. Fitch Ratings has affirmed four Shinhan Card transactions with Stable Outlooks. All of the transactions are securitisations of credit card receivables in South Korea originated by Shinhan Card Co. (Shinhan Card; A-/Stable/F2).

The rating actions are as follows:
Shinhan Card 2011-3 International Ltd (Shinhan 2011-3)
USD250m floating-rate notes due November 2016 affirmed at 'AAAsf'; Outlook Stable

Shinhan Card 2012-1 International Ltd (Shinhan 2012-1)
USD400m floating-rate notes due March 2017 affirmed at 'AAAsf'; Outlook Stable

Shinhan Card 2014-1 International Ltd (Shinhan 2014-1)
USD300m floating-rate notes due October 2018 affirmed at 'AAAsf'; Outlook Stable

Shinhan Card 2014-2 International Ltd (Shinhan 2014-2)
USD500m floating-rate notes due January 2019 affirmed at 'AAAsf'; Outlook Stable

KEY RATING DRIVERS
The affirmations reflect Fitch's view that the performance of the underlying assets has remained well within expectations, and that credit enhancement is sufficient to support the current ratings. Low delinquencies at 0.04%-0.06% at end-June 2015 and strong monthly principal payment rates of around 65%-74% sustain all the Shinhan Card transactions' healthy excess spreads and resilient transaction performance. The three-month rolling average annualised net yields for the Shinhan Card transactions have been fairly stable since the last review. The three-month rolling average net yields are all well above the KRW0 level (0%) that would trigger early amortisation, and net yields rate remain positive at 3%-5% after transaction costs, expenses and note interests.

Benign interest rates and low unemployment rates in South Korea have continued to support the underlying transactions, despite high household debt levels.

Fitch expects delinquencies to remain stable over the next 12 months because the product mix has a smaller portion of high-risk card receivables than the maximum set in the transaction documents. The eligibility criteria Fitch uses to assess the underlying pools and the agency's conservative base case assumptions show the transactions have sufficient protection for the current ratings. This is reflected in the Stable Outlooks.

RATING SENSITIVITIES
Fitch analyses two different scenarios of an increase in defaults and a reduction in monthly payment rates (MPR) by using the latest product mix as at end-June 2015 to assess the rating sensitivities of the rated notes:

For Shinhan 2011-3, the annualised default rate would have to rise from the base default rate of 6.3% to 32% before a rating downgrade may be considered. The MPR would have to decline from the base case of 60.2% to 26% before a rating downgrade may be considered.

For Shinhan 2012-1, the annualised default rate would have to rise from the base-case default rate of 5.6% to 25.0% before a rating downgrade may be considered. The MPR would have to decline from the base case of 58.8% to 28.5% before a rating downgrade would be considered.

For Shinhan 2014-1, the annualised default rate would have to rise from the base-case default rate of 5.1% to 27.0% before a rating downgrade may be considered. The MPR would have to decline from the base case of 61.3% to 27.5% before a rating downgrade would be considered.

For Shinhan 2014-2, the annualised default rate would have to rise from the base-case default rate of 6.1% to 23.0% before a rating downgrade may be considered. The MPR would have to decline from the base case of 57.4% to 29.0% before a rating downgrade may be considered.

DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.

DATA ADEQUACY
Fitch conducted a file review of 10 sample loan files on 17 September 2014 that focused on the underwriting procedures conducted by Shinhan Card compared to Shinhan Card's credit policy at the time of underwriting. Fitch has checked the consistency and plausibility of the information and no material discrepancies were noted that would impact Fitch's rating analysis.

A comparison of the transaction's representations, warranties and enforcement mechanisms (RW&Es) to those of typical RW&Es for this asset class is available by accessing the links given under Related Research below.