OREANDA-NEWS. Fitch Ratings has assigned a final rating to Shinhan Card 2015-1 International Ltd's notes as follows:

USD400m floating-rate notes due February 2020 rated 'AAAsf'; Outlook Stable

The transaction is a securitisation of credit card receivables denominated in Korean won and originated by Shinhan Card Co (SHC; A-/Stable/F2).

KEY RATING DRIVERS
The rating is based on an initial subordination of 18% for the senior notes in the form of a subordinated seller interest, and a non-subordinated seller interest absorbing the dilution risk of the securitised credit card receivables. The rating also reflects a cash reserve funded at closing, which covers two months of interest payments, expenses and servicer transition costs; early amortisation triggers and servicer termination triggers; currency and interest-rate swap arrangements; and back-up servicing provided by Woori Bank (A-/Stable/F1).

It further takes into account SHC's leading position in South Korea's credit card market, commanding around 22 million cardholders with SHC - which is about 43.5% of South Korea's total population of 50.6 million - and the sound financial and legal structure of the transaction.

The currency and interest-rate swaps are provided by DBS Bank Ltd., Seoul branch (DBS, Seoul). US dollar swap payment obligations will be made directly to the noteholders should transfer and convertibility risks occur in South Korea so long as the corresponding Korean won obligations are received at DBS, Seoul.

Fitch expects a stable ongoing performance of South Korean credit card receivables, backed by steady unemployment (3.2% in September 2015). However, the agency believes that high household debt in South Korea and a potential rise in interest rates could put pressure on the performance of credit card assets. Sharp deterioration in the credit card sector cannot be ruled out if employment were to weaken significantly or if interest rates were to rise very rapidly, although these are not Fitch's base cases.

RATING SENSITIVITIES
The 'AAAsf' rating may be downgraded if the weighted-average base-case default rate (worst product mix assumed) were to increase by 91% to 12.9%, from 6.8%, all other variables remaining unchanged.
The 'AAAsf' rating may be downgraded if the weighted-average base-case monthly payment rate were to decline by 27% (worst product mix assumed) to 32.7%, from 44.6%, all other variables remaining unchanged.
The rating addresses the timely payment of interest and the ultimate payment of principal by the legal final maturity in February 2020.

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 SHC compared with SHC's credit policy at the time of underwriting. Fitch has checked the consistency and plausibility of the information, and no substantial discrepancies were noted that would have an impact on Fitch's rating analysis.

Fitch reviewed the results of the agreed-upon procedures (AUP) conducted on the portfolio; the AUP checked key eligibility criteria matching with the selected samples provided to Fitch for its rating analysis, and reported no significant errors that would affect Fitch's rating analysis.