KBRA Assigns Preliminary Ratings to Notes Issued by Genesis Sales Finance Master Trust, Series 2020-A
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by Genesis Sales Finance Master Trust, Series 2020-A (GSFMT Series 2020-A), a credit card asset-backed securitization.
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by Genesis Sales Finance Master Trust, Series 2020-A (“GSFMT Series 2020-A”), a credit card asset-backed securitization.
The collateral in the GSFMT Series 2020-A deal includes $175.268 million of undiscounted credit card receivables principal balance, as of the October 31, 2020 cutoff date. The ratings reflect the initial credit enhancement level range of 49.10% for the Class A notes to 8.50% for the Class E notes.
The financial impact of COVID-19 has resulted in an economic slowdown and high unemployment, which can adversely impact the performance of the subject pool and credit card loans in general. In considering this risk, KBRA applied additional stress scenarios by increasing its expected base case charge-off rate assumption and decreasing its monthly payment rate assumption. In determining the scenarios, KBRA considered the relationship between the historical unemployment rate and annualized gross loss rates through the 2008-2009 financial crisis for different types of lending products. The increase in loss assumptions also incorporated higher charge-off rates observed in the Company’s managed portfolio performance during the first half of 2020 with moderation in recent months. This included loans subject to an extension program, and the performance of such loans upon the program expiration. KBRA also applied additional stress in its analysis owing to the general retail environment as well as the subject transaction’s retail concentration.
Genesis Financial Solutions, Inc., including its affiliates, (“Genesis” or the “Company”) is a privately held consumer finance company that was established in 2001 and provides service to support both general purpose and private label retail credit card programs. These services include marketing and advertising, developing and applying credit scoring criteria, making credit decisions using the originating partners credit policy, providing customer service, sending billing statements and collecting on delinquent accounts. The Company commenced their point-of-sale private label retail credit card program in 2011. and entered the general-purpose credit card business 2013.
KBRA applied its Global Credit Card ABS Rating Methodology and Global Structured Finance Counterparty Methodology as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA also conducted an operational assessment of Genesis, as well as a review of the transaction’s legal structure and transaction documents. KBRA will also review the operative agreements and legal opinions for the transaction prior to closing.
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Disclosures
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA.
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