Fitch: US Credit Card ABS Near Records, Underwriting Loosening

NEW YORK--()--Ongoing improvement in U.S. economic and job market conditions should continue the streak of strong performance and keep metrics in record territory, Fitch Ratings says.

Jobless claims continue to hover around historic lows, falling to their lowest level since November 1973. The most recent four-week moving average fell to 278,500 and has remained below the 300,000 benchmark. The strengthening job market should continue to support U.S. credit card ABS as metrics remain near their historic levels.

However, continuation of the economic improvement may lead to further loosening of underwriting standards. Fitch expects the loosening of credit thus far will not have an impact on ABS trusts. Over the longer-term, it may result in weaker performance.

Fitch's Prime Credit Card Index indicates the streak of strong card ABS performance in the near term to persist. We expect both prime chargeoffs and 60+ day delinquencies to decline slightly, with delinquencies approaching another historic low. Prime monthly payment rate (MPR) is also expected to improve slightly while prime gross yield is expected to dip.

Retail metrics should also remain near their records. We expect retail gross yield and MPR to improve from last month's figures. Retail chargeoffs are predicted to decline for the third month in a row while retail 60+ day delinquencies to tick up slightly, but remain near their historic lows.

Our expectations of these trends reflect the June reporting period (as of June 30, 2015) and July distribution date. The actual results will be available in early August.

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.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Stephanie Lobaccaro, +1-212-908-0769
U.S. Structured Finance
Associate Analyst
33 Whitehall Street
New York, NY
or
Herman C. Poon, +1-212-908-0847
U.S. Structured Finance
Director
or
Fitch Wire
Rob Rowan, +1-212-908-9159
Senior Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Stephanie Lobaccaro, +1-212-908-0769
U.S. Structured Finance
Associate Analyst
33 Whitehall Street
New York, NY
or
Herman C. Poon, +1-212-908-0847
U.S. Structured Finance
Director
or
Fitch Wire
Rob Rowan, +1-212-908-9159
Senior Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com