OREANDA-NEWS. Fitch Ratings has affirmed KB Kookmin Card Second 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 for the transaction.

The rating action is as follows:
USD300m floating-rate notes due February 2019 affirmed at 'AAAsf'; Outlook Stable

KEY RATING DRIVERS
The affirmation reflects Fitch's view of the transaction's stable asset performance, KB Card's sound origination, underwriting, and servicing practices, and sufficient credit enhancement (CE) of 23.0% for the rated notes. The transaction is in its revolving period, and is scheduled to enter a six-month controlled amortisation period at the end of August 2017. Monthly payment rates have been stable at above 65%, and delinquencies have been consistently below 0.1% since closing. The sound macroeconomic outlook and low unemployment rates in South Korea have continued to support the underlying transaction, despite the economy's high and rising household debt levels.

Low delinquencies to date have been supported by a favourable product mix, which features low actual proportions of risky cash advance and revolving cash advance products. Actual payment rates of at least 65% have been supported by a stable proportion of the full-repayment lump-sum product. Based on Fitch's conservative base-case assumptions at closing, the agency deems the transaction's CE to provide sufficient protection for the current rating, assuming the portfolio migrates to the worst product mix based on the transaction's product composition limits.

According to the August 2015 servicer report, the three-month rolling average delinquency ratio was 0.07%, well below the transaction's 2.0% early amortisation trigger.

The three-month average annualised net yield for the same period was 4.55%, and the three-month average net yield was KRW2.2bn as of August 2015, above the transaction's trigger of zero. The three-month average payment rate was 67.9%, well above the transaction's trigger of 45.0%.

RATING SENSITIVITIES
Fitch has used two different scenarios to evaluate rating sensitivities of the rated notes: an increase in the weighted-average annualised base-case default rate, and a reduction in the weighted-average base-case monthly payment rate (MPR). Sensitivities are based on the worst product mix assumed at closing.

Keeping all other parameters constant, Fitch may consider downgrading the transaction to 'AAsf' if the weighted-average base-case annualised default rate rises to 16.9%. Fitch may also consider a rating downgrade to 'AAsf' if the weighted-average MPR is reduced to 28.7%, keeping other parameters constant.

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 20 sample loan files focusing on the underwriting procedures conducted by KB Card compared to KB 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.

Initial Key Rating Drivers and Rating Sensitivity are described further in the New Issue report dated 26 November 2014.

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.