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Rating Action:

Moody's assigns provisional ratings to American Express 2018-7 card ABS

16 Jul 2018

Approximately $500 million of asset-backed securities rated

New York, July 16, 2018 -- Moody's Investors Service has assigned a provisional (P)Aaa (sf) rating to the Class A Floating Rate Asset Backed Certificates and a provisional (P)Aa2 (sf) rating to the Class B Floating Rate Asset Backed Certificates of Series 2018-7 to be issued by the American Express Credit Account Master Trust, sponsored by American Express National Bank. Moody's has also assigned a provisional (P)Baa2 (sf) rating to the Class 1 Floating Rate Secured Notes to be issued by the related American Express Credit Account Secured Note Trust 2018-7.

Moody's rating actions are as follows:

Issuer: American Express Credit Account Master Trust, Series 2018-7

$450,000,000 Class A Floating Rate Asset Backed Certificates, Assigned (P)Aaa (sf)

$16,811,000 Class B Floating Rate Asset Backed Certificates, Assigned (P)Aa2 (sf)

Issuer: American Express Credit Account Secured Note Trust 2018-7

$33,621,000 Class 1 Floating Rate Secured Notes, Assigned (P)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, the credit enhancement provided by subordinate securities, and the likelihood of the sponsor becoming insolvent and shutting down its credit card portfolio. Moody's assesses this likelihood from the sponsor's counterparty risk assessment (CR Assessment).

The Class A Certificates represent 87.00% of the total issuance, Class B Certificates represent 3.25% of the total issuance, the Class 1 Notes issued by the American Express Credit Account Secured Note Trust 2018-7, represent 6.50% and the Class 2 Notes, 3.25%. The Class A Certificates, the Class B Certificates and the Class 1 Notes have floating rate coupons. The expected maturity date of the securities is July 17, 2023 and their legal maturity date is February 17, 2026. Moody's ratings address 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 National Bank, and serviced by American Express Travel Related Services Company, Inc. American Express National Bank's long-term deposit ratings are Aa2 stable/long-term senior unsecured (P)A2, long-term CR Assessment A1(cr), short-term deposits P-1, and BCA a2. American Express Travel Related Services Company, Inc.'s long-term issuer rating is A2 stable.

Summary of Analytical Outputs

Moody's Aaa LGSD and the Aaa CE are 34.1% and 13.0%, respectively, for this transaction. The Aaa LGSD reflects Moody's expectation of the trust's performance following a sponsor default and portfolio shutdown. The Aaa CE reflects the level of credit enhancement consistent with a Aaa (sf) rating by haircutting the Aaa LGSD based on the CR Assessment of the sponsor.

Moody's expects performance in the range of 2.0% - 2.5% for charge-offs, 22.0% - 25.0% 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 Actions:

The principal methodology used in these ratings was "Moody's Approach to Rating Credit Card Receivables-Backed Securities" published in July 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

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

Up

Moody's could upgrade the ratings of the Class B Certificates and Class 1 Notes if our expectation of the trust's performance following a sponsor default and portfolio shutdown (i.e., Aaa LGSD) improves materially, specifically, if the charge-off rate falls or the payment rate or yield rises. A decrease in Moody's assessment of the likelihood of the sponsor shutting down its credit card portfolio, generally reflected from an upgrade in the sponsor's CR Assessment, could also lead to an upgrade to the rating of the Class B Certificates and Class 1 Notes.

Down

Moody's could downgrade the ratings of the Class A Certificates, Class B Certificates and Class 1 Notes if our expectation of the trust's performance following a sponsor default and portfolio shutdown (i.e., Aaa LGSD) deteriorates materially, specifically, if the charge-off rate rises or the payment rate or yield falls. An increase in Moody's assessment of the likelihood of the sponsor shutting down its credit card portfolio, generally reflected from a downgrade in the sponsor's CR Assessment, could also lead to a downgrade to the rating of the Class A Certificates, Class B Certificates and Class 1 Notes.

Loss and Cash Flow Analysis:

In rating this transaction, Moody's uses a cash flow model to determine the collateral losses in a maximum stress scenario. As a second step, Moody's haircuts such collateral losses based on the sponsor's credit quality. Finally, Moody's compares note available credit enhancement with the adjusted collateral losses, taking into account loss allocation and other structural features, to derive the expected loss for each rated instrument.

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.

Further information on the representations and warranties and enforcement mechanisms available to investors are available on http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1133157

Moody's describes its loss and cash flow analysis in the section "Ratings Rationale" of this press release.

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.

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 credit rating action on the support provider and in relation to each particular credit 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 credit rating action, and whose ratings may change as a result of this credit 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.

Alan Birnbaum
Vice President - Senior Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Pedro Sancholuz Ruda
Vice President - Senior Analyst
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
© 2022 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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MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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