KEY RATING DRIVERS
The senior unsecured debt rating is equalized with Synchrony's long-term Issuer Default Rating (IDR), which Fitch assigned on
The proceeds of the debt issuance will be primarily used to repay existing debt. As such, Fitch does not believe the issuance will have a material impact on the company's leverage.
Fitch views the company's ability to successfully access the unsecured debt markets on reasonable terms favorably.
The senior unsecured debt rating is primarily sensitive to changes in Synchrony's long-term IDR.
Fitch believes positive ratings momentum for Synchrony is limited in the near term. Longer term, however, positive ratings momentum could be driven by a reduced reliance on a limited number of retail partners, a material shift in the underlying risk profile of the portfolio toward higher credit quality borrowers, demonstrated access to the unsecured debt markets at a reasonable cost, and additional actions to further enhance funding and liquidity sources while maintaining strong capital levels at both the parent and operating company levels.
Furthermore, Fitch believes the durability of
For Synchrony, negative ratings momentum could develop from the loss or default of a key retail relationship, substantial credit quality deterioration, an increase in leverage, a reduction in liquidity, an inability to access the capital markets on reasonable terms for funding, significant shareholder distributions above expectations, and/or potential new and more onerous rules and regulations. The unsecured debt could also be notched below the IDR in the event of insufficient unencumbered assets relative to the amount of unsecured debt outstanding.
Fitch assigns the following rating:
--Senior Unsecured Debt rated 'BBB-'
Additional information is available on www.fitchratings.com
Fitch Fundamentals Index (
U.S. Bank HoldCos & OpCos: Evolving Risk Profiles (
Global Financial Institutions Rating Criteria (
FinCo Deposit Sensitivity to Rising Rates (
Nonbank Financial Institution Interest Rate Sensitivity (
2014 Outlook: U.S. Finance and Leasing Companies (
Finance and Leasing Companies Criteria (
Finance and Leasing Companies Criteria
2014 Outlook: U.S. Finance and Leasing Companies (Strong Fundamentals, But Sector Headwinds Persist)
Nonbank Financial Institution Interest Rate Sensitivity
FinCo Deposit Sensitivity to Rising Rates
Source: Fitch Ratings
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