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Fitch Affirms Discover Card ABS Following Spin-off Announcement.

NEW YORK -- Fitch Ratings affirms the current ratings on approximately $24.7 billion in outstanding credit cards asset-backed securities (ABS) issued by the Discover Card Master Trust I (DCMT I). Transactions affected are listed below. This action comes as a result of Morgan Stanley's announcement of a planned spin-off of Discover Financial Services. This affirmation is based on Fitch's belief that the stand alone Discover entity including Discover Bank will be structured to remain an investment grade rated institution, coupled with the quality of the receivables, collateral performance, available credit enhancement, the transactions' legal and cash flow structures, and the servicing capabilities provided by Discover Bank.

While details of its stand alone financial profile have yet to be finalized and based on information provided, Fitch anticipates the entity would remain at least investment grade. This is an important consideration from an ABS perspective, given the Discover Card proprietary payment network and structural features that benefit bondholders.

With the available credit enhancement, the transactions are able to withstand considerable economic and credit stress scenarios consistent with the assigned ratings and still return full principal and timely interest to bondholders under early amortization.

As of November 30, 2006, the DCMT I contained roughly $33.1 billion in principal receivables which supported approximately $24.7 billion in outstanding investor certificates. Collateral performance metrics continue to be within Fitch's expectations. For the collection period ending November 30, 2006, yield, MPR and charge offs registered 16.18%, 20.54%, and 4.70%, respectively. Excess spread, which can be used to gauge the overall health of the trust, has remained strong averaging 4.99% for the last 12-months. With respect to year-over-year performance, trust variables (yield, MPR, chargeoffs, 60+ delinquencies and three-month excess spread) continue to exhibit stability and perform similar to industry standards. For the 12-month period ended November 2006, yield, MPR, charge offs and three-month excess spread averaged 16.36%, 21.74%, 4.19% and 4.86% respectively.

Today, Fitch affirmed the long- and short-term debt ratings of Morgan Stanley ('AA-/F1+') but changed the Outlook to Negative from Stable. Fitch placed the ratings of Discover Bank ('AA-/F1+') on Rating Watch Negative. As seller/servicer, Discover Bank currently assumes the same long-term rating as Morgan Stanley. Morgan Stanley's stated intention, while subject to alteration, is to structure the divested company to be strong enough to issue debt on a stand alone basis. Fitch's Financial Institutions Group has indicated that Discover's stand alone financial profile would warrant the assignment of a lower, albeit investment grade, long-term debt rating. Discover maintains a 'B/C' individual rating based on profitability, asset quality, funding and capital structure independent of Morgan Stanley. Future rating actions for Discover will depend on the funding and equity structure of the company. Fitch will also consider challenges such as scale, growth and product.

Fitch will continue to monitor collateral pool performance and evaluate the impact to Discover Bank as a stand alone entity as it relates to DCMT I's outstanding ratings.

For more information on the ratings of Morgan Stanley and Discover Bank please refer to the Fitch Ratings Press Release dated December 19, 2006 'Fitch Revises Morgan Stanley's Outlook to Negative; Places Discover on Watch Negative'.

Fitch affirms the following Discover Card Master Trust I certificates:

Series 1996-4

--$1,000,000,000 Class A asset-backed certificates at 'AAA';

--$52,632,000 Class B asset-backed certificates at 'A+'.

Series 2000-4

--$650,000,000 Class A asset-backed certificates at 'AAA';

-- $34,211,000 Class B asset-backed certificates at 'A+'.

Series 2000-7

--$850,000,000.00 Class A asset-backed certificates at 'AAA';

--$44,737,000.00 Class B asset-backed certificates at 'A+'.

Series 2001-1

--$1,200,000,000 Class A asset-backed certificates at 'AAA';

--$63,158,000 Class B asset-backed certificates at 'A+'.

Series 2002-2

--$750,000,000 Class A asset-backed certificates at 'AAA';

--$39,474,000 Class B asset-backed certificates at 'A+'.

Series 2002-3

--$900,000,000 Class A asset-backed certificates at 'AAA';

--$47,369,000 Class B asset-backed certificates at 'A+'.

Series 2003-1 Subseries 3

--$500,000,000 Class A asset-backed certificates at 'AAA';

--$26,316,000 Class B asset-backed certificates at 'A+'.

Series 2003-2

--$1,000,000,000 Class A asset-backed certificates at 'AAA';

--$52,632,000 Class B asset-backed certificates at 'A+'.

Series 2003-3

--$900,000,000 Class A asset-backed certificates at 'AAA';

--$47,369,000 Class B asset-backed certificates at 'A+'.

Series 2003-4 Subseries 1

--$1,100,000,000 Class A asset-backed certificates at 'AAA';

--$57,895,000 Class B asset-backed certificates at 'A+'.

Series 2003-4 Subseries 2

--$750,000,000 Class A asset-backed certificates at 'AAA';

--$39,474,000 Class B asset-backed certificates at 'A+'.

Series 2004-1

--$1,250,000,000 Class A asset-backed certificates at 'AAA';

--$65,790,000 Class B asset-backed certificates at 'A+'.

Series 2004-2 Subseries 1

--$1,250,000,000 Class A asset-backed certificates at 'AAA';

--$65,790,000 Class B asset-backed certificates at 'A+'.

Series 2004-2 Subseries 2

--$500,000,000 Class A asset-backed certificates at 'AAA';

--$26,316,000 Class B asset-backed certificates at 'A+'.

Series 2005-1

--$1,500,000,000 Class A asset-backed certificates at 'AAA';

--$78,948,000 Class B asset-backed certificates at 'A+'.

Series 2005-2

--$800,000,000 Class A asset-backed certificates at 'AAA';

--$42,106,000 Class B asset-backed certificates at 'A+'.

Series 2005-3

--$1,500,000,000 Class A asset-backed certificates at 'AAA';

--$78,948,000 Class B asset-backed certificates at 'A+'.

Series 2005-4 Subseries 1

--$700,000,000 Class A asset-backed certificates at 'AAA';

--$36,843,000 Class B asset-backed certificates at 'A+'.

Series 2005-4 Subseries 2

--$800,000,000 Class A asset-backed certificates at 'AAA';

--$42,106,000 Class B asset-backed certificates at 'A+'.

Series 2006-1 Subseries 1

--$750,000,000 Class A asset-backed certificates at 'AAA';

--$39,474,000 Class B asset-backed certificates at 'A+'.

Series 2006-1 Subseries 2

--$750,000,000 Class A asset-backed certificates at 'AAA';

--$39,474,000 Class B asset-backed certificates at 'A+'.

Series 2006-2 Subseries 1

--$600,000,000 Class A asset-backed certificates at 'AAA'.

--$31,579,000 Class B asset-backed certificates at 'A+'.

Series 2006-2 Subseries 2

--$600,000,000 Class A asset-backed certificates at 'AAA';

--$31,579,000 Class B asset-backed certificates at 'A+'.

Series 2006-2 Subseries 3

--$320,000,000 Class A asset-backed certificates at 'AAA';

--$16,843,000 Class B asset-backed certificates at 'A+'.

Series 2006-3

--$500,000,000 Class A asset-backed certificates at 'AAA';

--$26,316,000 Class B asset-backed certificates at 'A+'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.
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Date:Dec 20, 2006
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