Fitch Ratings: Tiering Is The Catchphrase Again In The ABS World.Business Editors NEW YORK--(BUSINESS WIRE)--May 28, 2002 Volatile credit performance, uncertain economic conditions, waning investor confidence and increased regulatory scrutiny have forced the ABS (Automatic Backup System) See backup program. market to stick close to the basic asset types during first-quarter 2002, 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. an article appearing in the latest edition of '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. ABS Exchange' newsletter. Within each of the major product types, (credit card, auto and home equity) the top names have avoided significant performance problems while the lower tier, non-prime issuers have faced higher credit volatility. The issuance of non-standard ABS is almost non-existent and there is increasing evidence of issuer tiering. 'With investors' heightened concerns about headline risk headline risk The possibility a negative news story will spread to other media outlets and cause a significant change in the value of an investment. and credit quality comes a flight to the names and asset types that are perceived to be the most stable' said Kevin Duignan, Managing Director, Fitch Ratings. 'In times of stress, tiering becomes more evident as has been the case in all of the major product areas.' Fitch expects cumulative losses in the credit card world to continue to rise, with chargeoff numbers testing or exceeding the mid-1997 highs of roughly 7%. Non-prime and retail credit card issuers, in particular are expected to face a rough road ahead. The auto sector has also seen performance deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. due largely to the soft used car market, and despite some improvement, Fitch has not conceded con·cede v. con·ced·ed, con·ced·ing, con·cedes v.tr. 1. To acknowledge, often reluctantly, as being true, just, or proper; admit. See Synonyms at acknowledge. 2. that the worst is over yet. 'The subprime (auto) sector, in particular, is an area of concern because of higher volatility in light of economic weakness and softer used car prices. In addition, the rental fleet sector has not yet recovered from the events of Sept. 11,' said Duignan. Other articles appearing in the latest edition of 'The Fitch Ratings ABS Exchange' include highlights from Fitch's new ABS Equipment Index, an ABCP ABCP Asset-Backed Commercial Paper ABCP Associação Brasileira de Cimento Portland (Brazil) ABCP Associação Brasileira de Ciência Política ABCP American Board of Cardiovascular Perfusion ABCP Associate Business Continuity Planner market update and articles discussing the outlook for the auto and credit card markets. In addition, the newsletter highlights Fitch's recently released Structured Finance Transition Study which speaks to the historically stable trends in ABS rating migration. 'The Fitch Ratings ABS Exchange' is available via FitchResearch, the Fitch Ratings subscription-based web site located at 'www.fitchratings.com'. |
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