NEW YORK--()--The new year began in much the same way 2012 ended for U.S. credit card ABS with both chargeoffs and delinquencies falling to new lows, according to the latest index results from Fitch Ratings.
Of the other major collateral metrics, yield and excess spread declined while payment rates improved. Prime credit card ABS has consistently shown improvement in performance, specifically chargeoffs post-recession, which has continued into the new year.
Fitch's Prime Credit Card Chargeoff Index declined 30 basis points (bps) in February following a temporary increase in the prior month. Chargeoffs are now at a new six year low. Losses decreased to 3.88% from 4.18%. Chargeoff rates improved at 26% lower from the same period last year.
According to Fitch's 60+ Day Delinquency Index, late payments dropped two bps. Delinquencies declined to 1.61%, the lowest level since Fitch launched its prime index in 1991. This improvement has pushed late stage delinquencies 65% below peak levels reached at the end of 2009.
Performance of gross yield worsened during the January collection period and decreased 1.16% to 17.35%. Three-month average excess spread dropped 24 bps after increasing for nine consecutive months prior. Excess spread is now at 11.40%, coming off an all-time record high of 11.64%. Despite the January decline, excess spread index levels are almost double their long-term average of roughly 6%.
Monthly payment rate (MPR) jumped 1.09% to 24.83%, its highest level historically.
Fitch's Prime Credit Card index was established in 1991 and tracks over $110 billion of prime credit card ABS backed by approximately $260 billion of principal receivables. The index is primarily comprised of general purpose portfolios originated by institutions such as Bank of America, Citibank, Chase, Capital One, Discover, etc.
Performance of Fitch's Retail Credit Card Index also improved. Both chargeoffs and delinquencies declined. Gross retail chargeoffs dropped 37 bps to 6.05%, approximately 19% lower than the previous year's results. Late stage retail delinquencies increased seven bps to 2.69%, a 21% improvement compared to levels during the same period last year.
Similar to the prime index, retail three-month average excess spread decreased after previously breaking a new record last month decreasing 42 bps to 15.24%. This level, however, remains robust as compared to its long term average of roughly 8.5%.
Fitch's Retail Credit Card index tracks more than $27 billion of retail or private label credit card ABS backed by approximately $51 billion of principal receivables. The index is primarily comprised of private label portfolios originated and serviced by Citibank (South Dakota) N.A., GE Money Bank and World Financial Network National Bank. More than 165 retailers are incorporated including Wal-Mart, Sears, Home Depot, Federated, Loews, J.C. Penney, Limited Brands, Best Buy, Lane Bryant and Dillard's, among others.
ABS ratings on both prime and retail credit card trusts are expected to remain stable given available credit enhancement, loss coverage multiples, and structural protections afforded investors.
Additional information is available at 'www.fitchratings.com'.