S&P: Synchrony Credit Card Master Note Trust Notes Series 2016-3 Assigned Preliminary Ratings
The note issuance is an asset-backed securities transaction backed by a pool of private-label and co-branded revolving credit card receivables generated by accounts owned by Synchrony Bank.
The preliminary ratings are based on information as of Sept. 12, 2016. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings.
The preliminary ratings reflect:Our view that the credit support for each class of notes is sufficient to withstand the simultaneous stresses we apply for each rating category to our 8.5% base-case loss rate assumption, 13.0% base-case payment rate assumption, and 21.5% base-case yield assumption, as well as our stressed purchase rate and excess spread assumptions. All of the stress assumptions outlined above are based on our current criteria and assumptions (see "General Methodology And Assumptions For Rating U. S. ABS Credit Card Securitizations," published April 19, 2010, and "Revised Purchase And Payment Rate Assumptions For U. S. Credit Card ABS," published Sept. 14, 2011).Our expectation that under a moderate ('BBB') stress scenario, all else being equal, our preliminary 'AAA (sf)', 'AA+ (sf)', and 'AA - (sf)' ratings on the class A, B, and C notes, respectively, will remain within one rating category of the preliminary ratings in the next 12 months, and our preliminary 'BBB (sf)' rating on the class D notes will remain within two rating categories of the preliminary rating in the next 12 months, based on our credit stability criteria (see "Methodology: Credit Stability Criteria," published May 3, 2010).Our view that the 5.5% retained transferor percentage requirement is sufficient to cover dilution risk in this trust. Our view of the credit risk inherent in the collateral loan pool based on our economic forecast, the trust portfolio's historical performance, the collateral characteristics, and vintage performance data. Our opinion of the quality and consistency of Synchrony Bank's account origination, underwriting, account management, and general operational practices and our view of Synchrony Financial's (BBB-/Stable/--) servicing experience. Our expectation for timely interest and ultimate principal payments made by the Sept. 15, 2022, final payment date based on our stressed cash flow modeling scenarios using assumptions commensurate with the preliminary ratings. The series 2016-3 transaction's underlying payment structure, cash flow mechanics, and legal structure.