River Funding No. 5. Preliminary Ratings As Of June 19, Minimum credit support (%) 1-FR AA+ (sf) VF AA+ (sf)

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1 Presale: River Funding No. 5 This presale report is based on information as of June 19, The ratings shown are preliminary. This report does not constitute a recommendation to buy, hold, or sell securities. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. Preliminary Ratings As Of June 19, 2017 Class Preliminary rating* Preliminary amount (mil. HK$) Minimum credit support (%) 1-FR AA+ (sf) VF AA+ (sf) *The ratings on the class 1-FR notes and 1-VF notes are preliminary and subject to change at any time. Maximum limit in respect of the Class 1-VF. HK$--Hong Kong dollar. Transaction Participants Issuer River Funding No. 5 Originator and seller PrimeCredit Ltd. Transaction administrator PrimeCredit Ltd. Servicer PrimeCredit Ltd. Security trustee Citicorp International Ltd. Supporting Ratings Bank account provider DBS Bank Ltd. Transaction Key Features Expected accession date June 28, 2017 Final maturity date Dec Collateral Credit card receivables originated by PrimeCredit Ltd. Aggregate receivables (mil. HK$) Number of accounts 54,313 Primary Credit Analyst: Jerry Fang, Hong Kong (852) ; jerry.fang@spglobal.com Secondary Contact: Aaron Lei, Hong Kong (852) ; aaron.lei@spglobal.com See complete contact list on last page(s) JUNE 20,

2 Transaction Key Features (cont.) Weighted-average contractual interest rate 33.65% Asset domiciled Hong Kong Rationale The preliminary ratings assigned to the class 1-FR notes and class 1-VR notes to be issued by River Funding No. 5 (the issuer), reflect the following factors. Credit risk We considered the portfolio's historical payment, purchase, charge-off, yield, and dilution rates in our analysis. We set our base-case assumptions in line with our global consumer receivables criteria, taking into account macroeconomic conditions and industry trends (see "Global Methodology And Assumptions For Assessing The Credit Quality Of Securitized Consumer Receivables," published on Oct. 9, 2014 on RatingsDirect). Operational risk We consider the servicer's severity risk to be moderate, and portability risk and disruption risk to be low under our operational risk criteria (see "Global Framework For Assessing Operational Risk In Structured Finance Transactions," published on Oct. 9, 2014). We took into account the obligor segment of the underlying credit card receivables, the depth of the Hong Kong credit card market, and projected cash flow available to pay an attractive servicing fee. These factors do not constrain our preliminary ratings on this transaction. Cash flow analysis We ran cash flow scenarios under rapid amortization, with four different interest rate stresses for the rated notes: "up," "down," "up then down," and "down then up." The available credit enhancement and excess spread for the rated tranches is sufficient to absorb the credit losses as well as payment including senior fees and expense as well as coupon to the notes to be rated under the respective rating scenarios. Counterparty risk The transaction is exposed to counterparty risk through DBS Bank Ltd. as the bank account provider. The documented downgrade and replacement language is in line with our current counterparty criteria (see "Counterparty Risk Framework Methodology And Assumptions," published on June 25, 2013). Legal risk The issuer is bankruptcy remote, in line with our criteria (see "Structured Finance: Asset Isolation And Special-Purpose Entity Methodology," published on March 29, 2017, and "Structured Finance Criteria Introduced for Cayman Islands Special-Purpose Entities," July 18, 2002). Strengths And Weaknesses Strengths The strengths we observed in the rating analysis are: JUNE 20,

3 The transaction benefits from a sequential pay structure during the rapid amortization period, which means the subordinated items are only paid after the senior notes. During the rapid amortization period, significant excess spread could be available to turbo pay principal to the notes to be rated and reimburse charge-offs. The originator's established track record and stable underwriting policies, as demonstrated by multi-year historical performance data, and effective risk management and control on asset quality. PrimeCredit Ltd. (PCL) has over 39 years of experience in unsecured consumer loan origination in Hong Kong and around 11 years in the credit card business. The company has adopted consistent credit practices, including credit scoring methodology, rigid credit review process, frequent risk review, and management control. Weaknesses The weaknesses of the transaction and the corresponding mitigants we observed in our rating analysis are: This is not a closed-portfolio transaction. It means that new receivables can be added during the transaction's revolving period, and this could cause a negative shift in the collateral portfolio's composition and credit quality. In this transaction, various asset eligibility criteria and portfolio parameters, the loss-coverage cash flow allocation, and some portfolio-performance related amortization triggers are set up to manage the portfolio credit quality during the revolving period. We also believe the seller's relatively stable credit underwriting strategies may partly mitigate the risk. In addition, our cash flow analysis assumes that a rapid amortization trigger has been reached and the transaction enters into the rapid amortization period. Obligor credit risk is one of the main risk factors in this transaction as a result of non-prime obligor segment. However, we have considered the historical charge-off rate, and made stressed assumptions when conducting credit and cash flow analysis to ensure credit enhancement available is sufficient to support the rating to be assigned to the notes. There is no back-up servicing arrangement in place on the accession date. However, the transaction documentation has certain events, which, if triggered, mean a back-up servicer shall be appointed in a specific period of time. The transaction has a liquidity reserve fully funded on the accession date. However, there is no minimum required amount. Although there is a replenishment mechanism, excess spread during the rapid amortization period must be used to turbo pay principal and therefore will not be available to top up liquidity reserve. To address this risk, we assume zero liquidity reserve in our cash flow scenario analysis. Transaction Structure The issuer, River Funding No. 5, is a special-purpose bankruptcy remote company incorporated in the Cayman Islands. Through a receivables acquisition agreement, the issuer purchases credit card receivables from PCL. To fund the purchase, the issuer issues five classes of notes. The class 1-FR notes and the class 1-VF notes are to be rated and placed through a committed facility up to a pre-set committed amount. Class 2 and class 3 (together as the mezzanine notes), and class S (the junior notes) will be unrated and are subscribed for by PCL through committed facilities. The class 1-FR and 1-VF notes are supported by the subordination of the mezzanine and junior notes. The transaction will have a 12-month revolving period, during which the principal collections (after principal draw if necessary) together with the drawdown of unused committed amount of the class 1-VF notes, the class 3, and the class S, can be used to purchase additional eligible receivables from PCL, provided a controlled amortization or a rapid amortization event has not occurred. The acquired new receivables, as well as the portfolio profile, need to meet the JUNE 20,

4 documented asset eligibility criteria and portfolio parameters. The performance of the issuer's obligations under the notes will be secured by the grant of a first-ranking security over all of the issuer's assets in favor of the security trustee (for itself and on behalf of the noteholders and the other secured parties). Throughout the transaction's life, PCL in the capacity of transaction administrator will be responsible for the calculation and instructions in relation to the payment obligations of the issuer. Note Terms And Conditions Interest payments Class 1-FR notes carry a fixed rate coupon, while the class 1-VF notes carry a floating interest rate benchmarked to the one-month HIBOR rate. Interest payment will be made on the invested amount every month through asset income, liquidity reserve, and principal draw. Principal payment structure The transaction will have a 12-month revolving period, during which the principal collections (after necessary principal draw) together with the drawdown of unused committed amount of the class 1-VF notes, the class 3 notes, and the class S notes, can be used to purchase additional eligible receivables from PCL, provided a controlled amortization or a rapid amortization event has not occurred. On and after the pass-through date, the transaction enters the controlled amortization period, during which the transaction will repay, on a pari passu and pro rata basis, one eighth of initial note principal balance of the class 1-FR notes and the class 1-VF notes on each payment date until both of the notes are fully repaid. Besides the foregoing principal amortization, excess spread to a certain extent as defined in transaction documents can be used to repay the class 1 notes. If a rapid amortization event occurs, principal collections will be used to repay the class 1 notes on a pari passu and pro rata basis until the class 1 notes are fully repaid. In addition, excess spread after paying senior fees and expenses as well as the interest of the class 1 notes, will be used to repay the class 1 notes until the class 1 notes are fully repaid. The class 2 notes will receive payments only after the class 1 notes are fully repaid; the class 3 notes will receive payments only after class 2 notes are fully repaid; and the class S notes will receive payments only after class 3 notes are fully repaid. Transaction Administrator call option On or after the pass through date, the transaction administrator can exercise a call option if ultimately the issuer can fully repay senior expenses as well as rated notes, mezzanine notes, and junior notes after selling back the receivables. Originator/Servicer Overview Company background PCL is a non-bank financial institution based in Hong Kong. Founded in 1977, it now operates as a licensed moneylender in Hong Kong. Since establishment, the company has focused on the unsecured personal loans business. JUNE 20,

5 PCL now owns a loan portfolio of local consumer loans, domestic helper's loans, and credit card receivables. It is one of the largest lenders in unsecured personal instalment loans in Hong Kong in the moneylending industry. In respect of credit cards, PCL currently provides two non-cobranded credit cards, which generate the receivables to be securitized. Credit card origination and underwriting PCL uses multiple channels for customer sourcing, including the branches, in-house direct sales team, and third-party sales agents. The underwriting practice has focused on understanding customers, customizing scorecard and credit rules, leveraging on credit bureau information, assessing borrowers' financial burden, assessment from experienced credit reviewers, and pricing for risk. Credit card receivables servicing Payments may be made through bank account debit, branch settlement, bank wiring, and third-party payment system (for instance, a convenience store payment system). Collection activities will start from one day past due of the payment. The collection measures and method of borrower contact depend on the length of delinquency. PCL may deal with severe delinquency through Hong Kong's legal process. PCL will write off receivables: (1) that are overdue for more than 90 days; (2) whose borrowers have filed for bankruptcy; and (3) on which PCL believes the continued repayments are unlikely per its servicing practices. Debt restructuring may be provided to selected borrowers in arrears if the borrower is willing to repay the money through industry-wide or other relief programs. Risk management As a moneylender in Hong Kong, PCL is subject to the Money Lenders Ordinance legislation. It also needs to abide by the anti-money laundering and counter-terrorist financing regulations. In addition to the statue regulations, PCL also adopts some governance requirements and operating procedures only seen in the banking industry. These include, but are not limited to, independent risk committees reporting to the board, separation of sales and loan approvers and other firewall requirements, comprehensive internal control system, well defined internal reporting system, outsourcing agents management, and internal audit requirements. Rapid Amortization Triggers The transaction has a set of rapid amortization triggers. They include performance parameters such as three-month average charge-off rate, the failure of key third parties (such as the servicer) in carrying out their obligations. For analytical purposes, we model transaction flows assuming that portfolio charge-off increases from the level that would cause the trigger to be breached to the rating scenario peak loss level over a 12-month period. JUNE 20,

6 Commingling Risk Our counterparty criteria consider a transaction's commingling risk through the rating on the servicer, the amount of funds likely to be held in a servicer account at any given time, and the potential impact of a delay in receipt of those funds on the supported securities. In our opinion, the potential commingling risk in this transaction is largely addressed by the lack of common payment dates and the maximum two business days of collections the servicer can hold before it remits the collections to the issuer account. Set-Off Risk There is no set-off risk for cash deposits in this transaction because PCL is not an authorized deposit-taking institution in Hong Kong. In addition, PCL's employees' accounts have been excluded. Counterparty Risk Of The Bank Account Provider Issuer accounts for this transaction will be held with DBS Bank Ltd., Hong Kong Branch. The transaction arrangement requires a minimum rating on the account provider, and requires the bank be replaced if the ratings on the bank are lower than that within 30 calendar days of the downgrade. This arrangement meets our counterparty criteria to support a 'AA+' rated transaction, considering the transaction's cash flow arrangement. Liquidity Support Timely payment of senior expenses and rated note interest is supported by the income collections, a liquidity reserve, and the use of principal collections. The initial liquidity reserve will be fully funded on the accession date. On each payment date, the issuer may draw funds in the liquidity reserve account if income collections are insufficient to cover the senior fees/expenses and interest due to the class 1 notes. The liquidity reserves could be topped up via excess spread, to the extent available. However, there is no minimum reserve requirement. To address the risk that the liquidity reserve is drawn but not topped up, we assume a zero reserve amount in our cash flow scenario analysis. Performance Parameters Historical performance data We reviewed the monthly performance data of credit card receivables originated by PCL from 2007 to Certain data with further breakdown is available for a shorter period of time due to an operation transition. The key variables that are subject to our rating stress include the charge-off rate, purchase rate, yield rate, payment rate, and dilution rate. PCL's credit card receivables consist of two products, namely retail purchase and cash advance. The data available to us is at the pool level rather than the product level. The mix of the two products remains stable in recent years. PCL JUNE 20,

7 intends to maintain a stable product mix. Moreover, the transaction has a portfolio parameter related to the product mix so that the deal would enter into the rapid amortization period should the cash advance product exceed a certain percentage. Charge-off rate We calculate the monthly charge-off rate as the annualized percentage of the outstanding portfolio balance at the beginning of the month, which is charged-off during the month. PCL will write off receivables: (1) that are overdue for more than 90 days; (2) whose borrowers have filed for bankruptcy; and (3) on which PCL believes the continued repayments are unlikely per its servicing practices. We also reviewed charge-off rates calculated on a four-month lagged receivables balance basis to observe any biasing effect of a changing receivables balance in the denominator of the charge-off rate calculation. However, the lagged charge-off rates largely mirrored the non-lagged figures because there has not been a rapid growth in receivables balance in recent years. We form a view on the base-case loss rate of 10.5% primarily by considering and analyzing the factors such as dynamic portfolio write-off data, PCL's charge-off policy, and economic cycles affecting Hong Kong. Purchase rate When setting assumptions regarding purchase rate we tend to look at the quality of the originator and its rating rather than the historical values. However, in this transaction, after the end of the revolving period, the issuer will not acquire new receivables. Consequently, we assumed a 0% purchase rate. Yield We define the yield rate as the annualized percentage of portfolio yield as a proportion of the outstanding portfolio balance at the beginning of the month. For the purpose of determining our base-case assumptions, portfolio yield consists of cash collections of finance charges (interest), late fees, and annual fees. In our view, 33% is an appropriate base-case yield rate for the securitized pool based upon the observation on dynamic pool data and the relatively stable trend in the past two years or so. Payment rate We calculate the monthly payment rate as the total principal and finance charge collections as a percentage of the outstanding balance at the beginning of the month. Based upon historical payment rate (especially in the past two years or so), the historical volatility in payment rates, and recent downward trend, we believe that a base-case payment rate of 19% is appropriate. Dilution losses Dilutions are noncash reductions to the receivables balance, including merchandise returns, rebates, refunds, and fraud. PCL's historical dilution rate is relatively low, reflecting that a significant portion of receivables are cash advance which does not have exposure to dilution risk due to merchandise return. We assume a base-case cumulative dilution rate of 0.30% by observing historical data in the past two years or so and applying the staggering methodology stated in our criteria. JUNE 20,

8 Cash-Flow Analysis Table 1 Base Case Performance Parameters Performance parameter Base case (%) Charge-off rate 10.5 Yield rate 33 Payment rate 19 Dilution rate 0.30 Our base-case assumptions are intended to be "best estimates" of future performance (nonstressed) for the asset portfolio. Our approach in determining these base cases considers historically observed performance. Table 2 Rating Scenario Stresses Rating Charge-off stress (x) Yield rate haircut (%) Payment rate haircut (%) Dilution rate stress (x) AA Our cash-flow model only considers the rapid amortization period in which notes have to be paid down amid deteriorating asset credit performance. We believe the notes can withstand losses (including dilution) and cash flow stresses commensurate with the ratings assigned, based on the assumptions and stresses outlined above, and other risk considerations. Our cash-flow assumptions include The initial charge-off rate of 14%, the higher of the level for the rapid amortization event and our base-case charge-off rate of 10.5%. We modelled transaction cash flows assuming that portfolio losses increase from the initial charge-off rate of 14% to the 'AA+' rating scenario peak loss level of 45.68% over 12 months as suggested by our criteria. Stressed yield rate assumption of 19.59% during the rapid amortization period. Stressed payment rate assumption of 9.98% during the rapid amortization period. Stressed dilution losses of 1.26% of the projected eligible receivables based upon the full utilization of the class 1-VF notes, minimum credit enhancement of 26%, and no new receivables to be added during the rapid amortization period. Sensitivity Analysis We ran sensitivity analyses to demonstrate the likely effect of scenario stresses on the ratings we assign. Essentially, we monitor the transaction charge-offs, payment rates, yield, and dilutions. As a part of our sensitivity-testing approach, we re-rated the transaction, assuming that the key credit parameters--charge-offs, payment rate, and yield--have deteriorated. See table 3 for the rating transition of a class of notes. JUNE 20,

9 Table 3 Sensitivity Analysis Stresses Performance parameter Base run Sensitivity scenario 1 Sensitivity scenario 2 Charge-off rate (%) Yield rate (%) Payment rate (%) After changing the base case for sensitivity analysis, we applied our standard rating methodology that we use to rate the transaction. At the same time, we did not change our purchase-rate assumption and interest-rate curves. The output of the analysis shows the likely rating transition of the notes to be rated, given the applied stresses, and the value and timing of any forecasted principal and interest shortfalls. When applying sensitivity stresses in the manner described above, the result of the modeling is intended to be a simulation of what could happen to the ratings on the notes to be rated. Under the sensitivity scenarios, we observe that the initial ratings on the notes could transition to the stress test ratings. Table 4 sets out what the rating level the class 1 notes would be at accession date under each sensitivity scenario. Table 4 Sensitivity Analysis Results Class Preliminary Rating Sensitivity scenario 1 Sensitivity scenario 2 1-FR and 1-VF AA+ (sf) AA AA- Monitoring And Surveillance We consider this transaction to be exposed to any change in the following performance indicators: Charge-off rate; Yield rate; Payment rate; and Dilution rate. It is difficult for these parameters to move in isolation, and an improvement in the performance of one parameter can compensate for deterioration in the performance of another. We continually monitor the collateral performance for any adverse effect on the ratings on the notes. Related Criteria And Research Related Criteria Global Methodology And Assumptions For Assessing The Credit Quality Of Securitized Consumer Receivables, Oct. 9, 2014 Global Framework For Assessing Operational Risk In Structured Finance Transactions, Oct. 9, JUNE 20,

10 Global Framework For Cash Flow Analysis Of Structured Finance Securities, Oct. 9, 2014 Legal Criteria: Structured Finance: Asset Isolation And Special-Purpose Entity Methodology - March 29, 2017 Structured Finance Criteria Introduced for Cayman Islands Special-Purpose Entities, July 18, 2002 Counterparty Risk Framework Methodology And Assumptions, June 25, 2013 Global Investment Criteria For Temporary Investments In Transaction Accounts, May 31, 2012 Credit Stability Criteria, May 3, 2010 Standard & Poor's Revises Criteria Methodology For Servicer Risk Assessment, May 28, 2009 Related Research Global Structured Finance Scenario And Sensitivity Analysis 2016: The Effects Of The Top Five Macroeconomic Factors," published Dec. 17, The issuer has not informed S&P Global Ratings whether the issuer is publically disclosing all relevant information about the structured finance instruments that are subject to this rating report or whether relevant information remains non-public. Analytical Team Primary Credit Analyst: Jerry Fang, Hong Kong (852) ; jerry.fang@spglobal.com Secondary Contact: Aaron Lei, Hong Kong (852) ; aaron.lei@spglobal.com JUNE 20,

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