Many of the credit card ABS metrics Fitch Ratings tracks will likely stay at or near their record levels in the near term. Results consistently exceeded expectations in 2014, with most of those performance gains attributable to the high credit quality of the underlying borrowers who have remained diligent in their repayment of credit card debt and post-recession economic improvement, mainly declines in unemployment.
Upcoming prime ABS indices will likely be stable. Prime chargeoffs are expected to increase slightly. 60+ days delinquencies should decline slightly from their record low reached last month. Gross yield will likely rise, in line with its season trend. And the prime monthly payment rate (MPR) will likely increase; its season trend has been particularly stable, decreasing in December four times since the inception of the index in 1996, 2001, 2007 and 2008.
Retail ABS indices should also maintain their near-record levels. We believe retail chargeoffs will rise slightly but remain in the range of the last three months. 60+ day delinquencies and gross yield are likely to decline, in line with their seasonal trends. The retail MPR is expected to increase to nearly the level reached three months ago.
Preliminary data reflect the December reporting period (as of Dec. 31, 2014) and January distribution date. Actual results will be available in early February.
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
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