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FITCH AFFIRMS CREDIT CARD SECURITIES DESPITE 14 PERCENT CAP PROPOSAL -- FITCH FINANCIAL WIRE --

FITCH AFFIRMS CREDIT CARD SECURITIES DESPITE 14 PERCENT CAP PROPOSAL
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Nov. 18 /PRNewswire/ -- Fitch affirms its ratings on all $9.0 billion credit card asset-backed securities (ABS) it rates. The proposed 14 percent cap on credit card interest rates poses no credit risk to ABS investors and therefore would not cause rating reductions on these issues. The reduction of interest rates from 20 percent to 14 percent alone would not cause investors to suffer a loss on these securities, although an early payout may be triggered.
 The interest rate cap may result in the prepayment of investor principal (i.e., early amortization) on most issues when finance charge income no longer covers the trusts' expenses (coupon, servicing and cardholder charge-offs). The early repayment helps protect investors from further declines in performance. Credit card issues with strong performance characteristics, lower current cardholder interest rates, and lower charge-offs should be more resistant to early amortization caused by an interest rate reduction.
 The ratings on the following transactions are affirmed:
 Issues: Rating Volume
 Chase Manhattan Credit Card Master Trust 1991-1 AAA 1,000MM
 Chase Manhattan Credit Card Master Trust 1991-2 AAA 750MM
 Household Credit Card Trust 1990-1 Class A/B AAA/AA- 800MM
 Household Credit Card Trust 1991-1 Class A/B AAA/AA- 714MM
 MBNA Master Credit Card Trust 1991-1 AAA 1,000MM
 Standard Credit Card Master Trust I,
 Series 1991-1, Class A/B AAA/A+ 1,686MM
 Series 1991-2, Class A/B AAA/A+ 703MM
 Series 1991-3, Class A/B AAA/A+ 984MM
 Series 1991-4, Class A/B AAA/A+ 1,405MM
 Total: 9,042MM
 The "AAA" ratings are based on credit enhancement that is sufficient to insulate investors from principal loss resulting from severe economic conditions. One of Fitch's severe economic scenarios, which is used to evaluate the adequacy of the available credit enhancement, assumes a federally imposed rate cap among other factors.
 A much more severe deterioration in cardholder performance could be sustained before investors lose principal. The "AAA" scenario permits a dramatic rate reduction as well as a simultaneous slowdown in cardholder's monthly payment rates (MPR) and considerable increases in credit card charge-offs. An example would be for interest rates to drop from 20 percent to 14 percent while cardholders' average monthly payment rates decrease immediately from the current 12 percent to 6.5 percent and cardholders' charge-offs increase from the current 5.75 percent to 25 percent.
 A deterioration in the MPR and charge-off rates may occur if interest rates are capped at 14 percent, although the changes would be more gradual than assumed under a "AAA" scenario. Investors are likely to have been repaid before the allowable levels are realized.
 The federally imposed cap would force some issuers to curtail or withdraw credit extended to cardholders, limiting their potential loss exposure. Without access to the relatively "easy" credit, made available by 20 percent interest rates in the past, cardholders will be forced to find other credit sources, if possible. Marginal credit risks, without access to credit to get them through tough times, are likely to default and may declare bankruptcy.
 Although the proposed 14 percent rate cap poses no credit risk, investors should be aware of the potential reinvestment risk caused by the early repayment of some securities in this low interest rate environment. In addition, securities bought in the secondary market at a premium may suffer a loss if they are repaid at par. Credit ratings do not address market risks.
 For a more detailed analysis of credit card asset-backed securities and their expected performance under various stress scenarios, call 800-75-FITCH for a copy of "Are Credit Cards Recession Proof?", dated 11/19/90. Fitch's surveillance on credit card transactions and other ABS is available on Bloomberg by typing FTC "GO".
 -0- 11/18/91
 /CONTACT: Gregory G. Raab, 212-908-0536, J. Douglas Murray, 212-908-0518, or Gracen R. Fraser, 212-908-0520, all of Fitch/ CO: ST: New York IN: FIN SU: RTG FC -- NY083 -- 4579 11/18/91 15:44 EST
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Date:Nov 18, 1991
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