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29 Sep 2005
MOODY'S RATES FIRST ISSUANCES FROM NEWLY-CREATED AMERICAN EXPRESS ISSUANCE TRUST
$1.2 Billion of Asset-Backed Securities Rated.
New York, September 29, 2005 -- Moody's Investors Service assigned ratings of Aaa, A2, Baa2
to the Class A, Class B, and Class C notes, respectively,
to two series of notes issued from the American Express Issuance Trust.
The complete rating actions are as follows:
Issuer: American Express Issuance Trust (the Trust)
$558,000,000 Floating Rate Class A Asset Backed Notes,
Series 2005-1, rated Aaa
$12,000,000 Floating Rate Class B Asset Backed Notes,
Series 2005-1, rated A2
$30,000,000 Floating Rate Class C Asset Backed Notes,
Series 2005-1, rated Baa2
$558,000,000 Floating Rate Class A Asset Backed Notes,
Series 2005-2, rated Aaa
$12,000,000 Floating Rate Class B Asset Backed Notes,
Series 2005-2, rated A2
$30,000,000 Floating Rate Class C Asset Backed Notes,
Series 2005-2, rated Baa2
Rachel Sun, an analyst in Moody's Asset Finance Group, said
the ratings on the Class A notes of each series are based on the high
quality of the underlying charge card receivables, the structural
integrity of the transactions, the expertise of American Express,
and the credit enhancement provided by the subordination of the Class
B and Class C notes.
The ratings on the notes are dependent on the financial condition of American
Express and its ability to generate additional receivables. Also,
due to the unique nature of these charge card receivables, the issuance
trust is dependent on the company's expertise as servicer,
which may not be readily duplicated by a successor servicer.
The Series 2005-1 notes were issued concurrently with the Series
2005-2 notes and are the first two series issued out of the newly
established American Express Issuance Trust.
The Series 2005-1 notes have a senior/subordinated structure with
floating rate coupons based on one-month LIBOR, payable monthly.
These notes have an expected principal payment date of September 15,
2010, and a legal maturity date of August 15, 2011.
Moody's ratings address the likelihood of interest payments being made
when due and the return of principal by the legal maturity date,
not the expected principal payment date.
The Series 2005-2 notes also have a senior/subordinated structure
with floating rate coupons based on one-month LIBOR, payable
monthly. These notes have an expected principal payment date of
September 17, 2012, and a legal maturity date of August 15,
2013. Moody's ratings address the likelihood of interest payments
being made when due and the return of principal by the legal maturity
date, not the expected principal payment date.
Credit enhancement for the Class A notes is provided by the subordinated
Class B notes (representing 2% of the total invested amount) and
Class C notes (5%),. The Class B notes are protected
by Class C notes. Credit enhancement for Class C notes is provided
by a spread account, which is initially unfunded, but may
increase if excess spread or the payment rate falls below prescribed levels.
The principal source of collateral backing the notes consists of unsecured
charge card receivables. Balances on these charge card accounts,
unlike revolving credit card accounts, are due in full each month
and, as a result, the payment rates are dramatically higher
than on typical revolving credit cards. In addition, because
the balances are due in full each month, the company does not typically
receive finance charges on the balances. Instead, the yield
collections are generated by applying a 3% discount factor to the
monthly principal payments.
Currently, the charge card receivables in the Trust are derived
from the small business and consumer business segment. Receivables
from a second segment, commercial charge cards, may be added
to the Trust in the future. Moody's contemplated some degree of
variability in the portfolio mix among these two distinct segments in
its credit assessment.
Since 2000, the average payment rate for the charge card receivables
including both consumer and small business charge card receivables and
commercial charge card receivables ranged from approximately 71%
to 89%, and the average charge-off rates ranged from
approximately 1% to 5%. During the same period,
yield ranged from approximately 25% to 32%.
The charge card accounts were originated by American Express Travel Related
Services Company, Inc. (TRS) or any of its affiliates and
were transferred by American Express Receivables Financing Corporation
V LLC, a transferor, to the issuance trust. TRS is
a wholly owned subsidiary of American Express Company, which has
a senior unsecured debt rating of Aa3 and a commercial paper rating of
Prime-1 from Moody's.
A New Issue Report describing Moody's analysis of these transactions in
greater detail is available at www.moodys.com.
New York
Jay Eisbruck
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Jinhua (Rachel) Sun
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
No Related Data.
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