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Rating Action:

Moody's assigns definitive ratings to American Express' 2014-2 card ABS

01 Jul 2014

Approximately $1.1 billion of asset-backed securities rated

New York, July 01, 2014 -- Moody's Investors Service has assigned a definitive Aaa (sf) rating to the Class A Fixed Rate Asset Backed Certificates and a definitive A2 (sf) rating to the Class B Fixed Rate Asset Backed Certificates of the Series 2014-2 issued by the American Express Credit Account Master Trust, sponsored by American Express Centurion Bank and American Express Bank, FSB. Moody's has also assigned a definitive Baa2 (sf) rating to the Class 1 Fixed Rate Secured Notes issued by the related American Express Credit Account Secured Note Trust 2014-2. Finally, Moody's announced today that the issuance of the Series 2014-2 transaction, would not, in and of itself and as of this time, result in the downgrade or withdrawal of the ratings on any class of outstanding securities issued by American Express Credit Account Master Trust or American Express Credit Account Secured Note Trust.

Moody's rating action is as follows:

Issuer: American Express Credit Account Master Trust 2014-2

$1,000,000,000 Class A Fixed Rate Asset Backed Certificates, Definitive Rating Assigned Aaa (sf)

$43,353,000 Class B Fixed Rate Asset Backed Certificates, Definitive Rating Assigned A2 (sf)

Issuer: American Express Credit Account Secured Note Trust 2014-2

$63,584,000 Class 1 Fixed Rate Secured Notes, Definitive Rating Assigned Baa2 (sf)

RATINGS RATIONALE

The ratings for the securities are based on the quality of the underlying credit card receivables, the expertise of American Express Travel Related Services Company, Inc. as servicer, the transaction's legal and structural protections including early amortization trigger events, and the credit enhancement provided by subordinate securities. The A represents 86.5% of the total issuance, Class B represents 3.75% of the total issuance, the Class 1 Fixed Rate Secured Notes issued by the American Express Credit Account Secured Note Trust 2014-2, 5.5% and the Class 2, 4.25%.

The Class A Certificates have a fixed rate coupon of 1.26%, the Class B Certificates have a fixed rate coupon of 1.42%, and the Class 1 Notes have a fixed rate coupon of 1.67%. The expected maturity date of the securities is 15 June 2017, and their legal maturity date is 15 January 2020. Moody's rating addresses the likelihood of interest payments being made when due and the return of principal by the legal maturity date.

The assets of the trust consist of credit card receivables, including both proprietary and co-branded credit cards, as well as receivables generated from the revolving credit lines extended to charge card members, from designated card accounts originated by American Express Centurion Bank and American Express Bank, FSB, and serviced by American Express Travel Related Services Company, Inc. American Express Centurion Bank's and American Express Bank, FSB's long-term bank deposit ratings are both A2 stable, their bank financial strength ratings/baseline credit assessments are both C+/a2 stable, and their short-term deposit and short-term senior obligation ratings are both Prime-1. American Express Travel Related Services Company, Inc.'s long-term rating is A2 and its short-term senior obligation rating is Prime-1.

Moody's expects performance in the range of 2.5% - 3.0% for charge-offs, 19.0% - 22.0% for yield and 32.0% - 35.0% for the principal payment rate.

Moody's performance expectations for a given variable indicate Moody's forward-looking view of the likely range of performance over the medium term. From time to time, Moody's may, if warranted, change these expectations. Performance that falls outside the given range may indicate that the collateral's credit quality is stronger or weaker than Moody's had anticipated when the related securities were rated. Even so, a deviation from the expected range will not necessarily result in a rating action nor does performance within expectations preclude such actions. The decision to take (or not take) a rating action is dependent on an assessment of a range of factors including, but not exclusively, the performance metrics.

Methodology Underlying the Rating Action:

The principal methodology used in these ratings was "Moody's Approach To Rating Credit Card Receivables-Backed Securities" published in April 2007. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

On 28 April 2014, Moody's issued a "Request for Comment" asking for market feedback on proposed changes to the methodology it uses to rate credit card receivables-backed securities. If Moody's adopts the new methodology as proposed, the changes could affect the ratings of the Class A Certificates, Class B Certificates, and Class 1 Notes. Please see "Request for Comment: Moody's Approach to Rating Credit Card Receivables-Backed Securities", which is available at www.moodys.com, for more information about the implications of the proposed changes to the methodology on Moody's ratings.

Factors that would lead to an upgrade or downgrade of the rating:

Up

Moody's could upgrade the ratings of the Class B Certificates and Class 1 Notes if performance improves materially, specifically, if the charge-off rate falls or the payment rate or yield rises. An upgrade to the rating of either of the bank sponsors could also lead to an upgrade to the rating of the Class B Certificates and Class 1 Notes, given the ongoing role of the bank sponsors as underwriters, risk managers, servicers and collectors.

Down

Moody's could downgrade the ratings of the Class A Certificates, Class B Certificates, and Class 1 Notes if performance deteriorates materially, specifically, if the charge-off rate rises or the payment rate or yield falls. A downgrade to the rating of either of the bank sponsors could also lead to a downgrade to the rating of the Class A Certificates, Class B Certificates, and Class 1 Notes, given the ongoing role of the bank sponsors as underwriters, risk managers, servicers and collectors.

Stress Scenarios:

As the Loss and Cash Flow Analysis section in the "Regulatory Disclosures" section describes below, Moody's quantitative analysis entails an evaluation of scenarios that stress factors contributing to sensitivity of ratings and take into account the likelihood of severe collateral losses or impaired cash flows.

RATINGS OF EXISTING SECURITIES UNAFFECTED

Moody's also announced today that the issuance of the Series 2014-2 transaction, would not, in and of itself and as of this time, result in the downgrade or withdrawal of the ratings on any class of outstanding securities issued by American Express Credit Account Master Trust or American Express Credit Account Secured Note Trust.

The Series 2014-2 transaction and the outstanding securities share a pro rata undivided interest in the same collateral pool of credit card receivables, and have the same early amortization events. Therefore, Moody's has determined that the issuance of the Series 2014-2 transaction, in and of itself and at this time, will not result in the downgrade or withdrawal of the ratings currently assigned to any class of outstanding securities issued by American Express Credit Account Master Trust or American Express Credit Account Secured Note Trust. However, Moody's opinion addresses only the credit impact associated with the proposed issuance, and Moody's is not expressing any opinion as to whether the issuance has, or could have, other non-credit related effects that may have a detrimental impact on the interests of holders of rated obligations and/or counterparties.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments in these transactions.

Further information on the representations and warranties and enforcement mechanisms available to investors are available on http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF372813

Loss and Cash Flow Analysis:

The analysis includes an assessment of collateral characteristics and performance to determine the expected collateral loss or a range of expected collateral losses or cash flows to the rated instruments. As a second step, Moody's estimates expected collateral losses or cash flows using a quantitative tool that takes into account credit enhancement, loss allocation and other structural features, to derive the expected loss for each rated instrument.

Moody's describes the stress scenarios it has considered for this rating action in the section "Ratings Rationale" of this press release.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Giyora Eiger
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Matias Langer
Vice President - Senior Analyst
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns definitive ratings to American Express' 2014-2 card ABS
No Related Data.
© 2021 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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