Fitch: U.S. Credit Card ABS Metrics Close Year On Top

NEW YORK--()--The exceptional collateral performance of credit card ABS in 2013 will persist into the beginning of 2014, although it is expected to taper off in the latter half of the year, Fitch Ratings says.

Performance gains in 2013 are attributable to the loss of lower credit-quality accounts from securitized pools of credit card receivables during the recession, we believe. Performance metrics are likely to settle at improved levels amid tighter lending standards and a downshift in consumer appetite for revolving debt.

Fitch expects our prime indices to remain strong for the November reporting period. Chargeoffs are likely to increase slightly from their record low last month. 60+ day delinquencies will also rise marginally from their record low. We expect gross yield to decline and remain in line with seasonal trends. We believe that monthly payment rate (MPR) will tumble from its all-time high. The drop could be the largest in five years. However, as most of the decline is attributable to one trust, we do not view this as a challenge to the market as a whole.

Fitch projects that our retail indices for November will remain in their current range for the November reporting period. Retail chargeoffs are poised to rise to their highest levels in 7 months. 60+ day delinquencies are likely to increase for the sixth straight month while staying in a reasonable range. Gross yield is set to increase to a new all-time high and MPR should decline slightly.

We expect some deterioration in performance metrics late in 2014 as originators will likely begin to loosen standards in an effort to stimulate lending growth. As these less seasoned accounts are added to securitizations, delinquency metrics and, ultimately, chargeoffs will be pressured.

Actual results for Fitch's Prime and Retail Indices for the November period will be available in early January.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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Contacts

Fitch Ratings
Jared Kirsch
Analyst
Asset Backed Securities
+1 212 908-0646
1 State Street Plaza
New York, NY
or
Steven Stubbs
Senior Director
Asset Backed Securities
+1 212 908-1676
or
Rob Rowan
Senior Director
Fitch Wire
+1 212 908-9159
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com

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Contacts

Fitch Ratings
Jared Kirsch
Analyst
Asset Backed Securities
+1 212 908-0646
1 State Street Plaza
New York, NY
or
Steven Stubbs
Senior Director
Asset Backed Securities
+1 212 908-1676
or
Rob Rowan
Senior Director
Fitch Wire
+1 212 908-9159
or
Media Relations:
Sandro Scenga, +1-212-908-0278 (New York)
sandro.scenga@fitchratings.com