Fitch: Subprime Credit Card Borrowers Reach New Lows.Business Editors NEW YORK--(BUSINESS WIRE)--April 21, 2003 As measured by the Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. Subprime Credit Card Index, chargeoffs moved higher to 18.9%, up 102 basis points (bps) from last month and the highest level ever reported by the index since its inception, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the latest edition of 'Credit Card Movers & Shakers', a monthly report examining consumer credit and credit card performance. Key factors contributing to the continued slide in subprime performance include aggressive underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. , the decline in outstanding principal receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed of subprime master trusts and the weak domestic economy. For the February collection period, credit card chargeoffs and serious delinquencies moved higher. Fitch's 60 days or more delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. index posted a seven-basis-point rise to 3.71%, its highest level since February 1998. After falling last month, chargeoffs rose 25 bps to 6.55%, its highest level since April 2002 and 79 bps higher than year-ago levels. Excess spread, which measures the profitability of securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. credit card securitizations, edged up 6 bps to 6.05%, 101 bps below prior year levels. After several months of stability, excess spread has begun to show some vulnerability, and rising chargeoffs have driven excess spread down. However, excess spread remains well within historical norms, benefiting mostly from reduced funding costs, and continues to provide investors with ample protection against rising chargeoffs. For a copy of 'Credit Card Movers & Shakers' please visit Fitch's web site at 'www.fitchratings.com' or contact Market Services at 1-800-853-4824. |
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