Fitch Downgrades $3.6 Billion of Metris Master Trust Notes.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 30, 2003

Fitch Ratings downgrades the class A, class B, and class C notes of the below listed series issued from Metris Master Trust and places these series on Rating Watch Negative. The actions, which affect approximately $3.6 billion of credit card backed securities, reflect persistent deterioration in master trust credit quality, the weakening seller/servicer profile, as well as the challenging regulatory landscape in the subprime credit card segment. These actions do not impact any trust issued series that are insured by MBIA, Inc.

Since Fitch's last rating action in October 2002, trust credit quality has continued to deteriorate. Reported gross losses have been consistently above 20.0% since the beginning of the year, averaging 21.26% year-to-date in 2003 compared to 15.82% in 2002 and 12.79% in 2001. While delinquencies have shown some stabilization and a slight improvement in recent months, they remain at high levels, indicating that trust losses are unlikely to recede over the near-term. Also, despite management's efforts to reposition the portfolio through tighter underwriting and more active account management strategies, Fitch believes such initiatives are unlikely to result in improved performance measures over the immediate term.

Fitch is also increasingly concerned over eroding excess spread levels, which have fallen to historical lows, and increased the risk of early amortization. Excess spread levels have declined significantly over the past few months, and for many series are below 2%, as rising loss rates continue to offset the trusts lower funding costs. At June 2003, one-month and three-month average excess spread stood at 1.14% and 1.93%, respectively. With trust funding costs unlikely to decline further and credit losses expected to remain above 20%, Fitch expects excess spread to remain under pressure. While under the terms of most ABS series issued out of the master trust, the base rate trigger is tripped if the three-month average excess spread falls below zero, the term and conditions of the recently negotiated conduit facilities are considerably more restrictive.

Fitch presently rates Metris Companies Inc. and its Direct Merchants Credit Card Bank, N.A. (DMCCB) bank subsidiary "CCC" and "B", respectively, with a Negative rating outlook. These ratings reflect the company's weak operating fundamentals and portfolio credit quality as well as near-term liquidity and long-term funding concerns. Challenges on the liquidity front include significant ABS maturities coming due in 2004 as well as the recently accelerated mandate to eliminate the remaining $565 million of deposits at DMCCB by the end of September 2003. While the deposit take-out had been specified in the revised operating agreement signed in March 2003, Fitch believes its acceleration signals heightened regulator concerns.

When modeling revised collateral performance expectations, Fitch employed several stress scenarios, incorporating a full purchase rate stress in conjunction with the stresses applied to other key variables. The decision to emphasize the full purchase rate stress scenario reflects Fitch's concern that Metris would be unable to fund new purchases on trust designated accounts in the event of insolvency, bankruptcy, or receivership. Also incorporated into our stresses, is the potential for a transfer of servicing whereby the servicing fee is increased beyond the 2.0% specified in outstanding term series. After reviewing these stress scenarios, Fitch believes available credit enhancement is no longer commensurate with the previously assigned ratings. As such, ratings on outstanding trust series are adjusted as indicated below.

Rating Actions

Series 2001-4

-- $372.93 Million Class A Floating Rate Notes to 'A-' from 'AA-';

-- $66.29 Million Class B Floating Rate Notes to 'BB+' from 'BBB+';

-- $60.77 Million Class C Floating Rate Notes to 'B' from 'BBB-'.

Series 2001-3

-- $484.81 Million Class A Floating Rate Notes to 'A-' from 'AA-';

-- $86.19 Million Class B Floating Rate Notes to 'BB+' from 'BBB+';

-- $79.01 Million Class C Floating Rate Notes to 'B' from 'BBB-'.

Series 2001-2

-- $559.39 Million Class A Floating Rate Notes to 'A-' from 'AA-';

-- $99.45 Million Class B Floating Rate Notes to 'BB+' from 'BBB+';

-- $91.16 Million Class C Floating Rate Notes to 'B' from 'BBB-'.

Series 2001-1

-- $454.97 Million Class A Floating Rate Notes to 'A-' from 'AA-';

-- $80.88 Million Class B Floating Rate Notes to 'BB+' from 'BBB+';

-- $64.03 Million Class C Floating Rate Notes to 'B' from 'BBB-'.

Series 2000-3

-- $372.9 Million Class A Floating Rate Notes to 'A-' from 'AA';

-- $66.29 Million Class B Floating Rate Notes to 'BB+' from 'A-';

-- $60.77 Million Class C Floating Rate Notes to 'B' from 'BBB'.

Series 2000-1

-- $447.52 Million Class A Floating Rate Notes to 'A-' from 'AA-';

-- $67.96 Million Class B Floating Rate Notes to 'BB+' from 'BBB+';

-- $84.53 Million Class C Floating Rate Notes to 'B' from 'BBB-'.