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Fitch Ratings is set to assign ratings to Citibank Credit Card Issuance Trust's (CCCIT) Citiseries class 2023-A1 and 2023-A2 notes, according to a recent announcement.
According to Fitch Ratings, these transactions involve the securitization of receivables from a pool of revolving credit card accounts originated by Citibank, N.A. The class A notes have a Stable Outlook, and Fitch's evaluation is based on various key factors. The analysis considers the performance of the underlying collateral, focusing on characteristics such as credit quality, seasoning, geographic concentration, delinquencies, and utilization rates on the credit cards. As of the October 2023 collection period, the gross chargeoff rate increased to 2.57 per cent, compared to 1.81 per cent a year prior. Delinquencies of 60 days or more have also been on the rise, reaching 0.99 per cent in October 2023, up from 0.62 per cent in the same period in 2022. Despite these challenges, strong Monthly Payment Rate (MPR) levels, reaching a record 40.43 per cent in April 2023, and a gross yield improvement to 23.20 per cent in October 2023 from 21.05 per cent a year earlier, contribute to sufficient credit enhancement (CE). The Stable Outlook reflects Fitch's expectation that performance will continue supporting the ratings. The analysis also considers Citibank's role as an effective originator and servicer. Any deterioration in Citibank's financial condition could impact the performance of the collateral pool backing the 2023-A1 and 2023-A2 notes. Counterparty risk and interest rate risk are also assessed in the rating process. Notably, the Citiseries class 2023-A1 and 2023-A2 notes are part of a multiple-issuance series, and interest rate risk is mitigated by available CE. Fitch emphasizes the importance of understanding the evolving energy transition landscape, particularly with the accelerated investment in renewable power production and emerging technologies. Investment trends in electrification and renewable power have dominated, with over 80 per cent of private capital energy transition investment between August 2022 and August 2023 allocated to these areas. While battery deployment and manufacturing are rapidly advancing, some sectors like carbon capture and storage still lag. Fitch's forthcoming ratings for CCCIT's Citiseries class 2023-A1 and 2023-A2 notes will reflect the comprehensive evaluation of collateral performance, issuer and servicer quality, counterparty and interest rate risks, and the broader context of the energy transition landscape. (ANI)
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