Fitch: US Credit Card ABS Staying Pat after Rate Decision

NEW YORK--(BUSINESS WIRE)-- U.S. credit card ABS metrics will hold their ground following the U.S. Federal Reserve's (Fed) recent decision to leave rates unchanged, Fitch Ratings says.

The Fed cited the growth of the job market as one of the factors leading it to leave rates unchanged. This suggests that ABS metrics will remain strong despite any potential or expected interest rate increases as job market strength will raise metrics more than any reasonable Fed policy will push them down.

The Fed's decision to leave rates unchanged support these metrics as they have retreated only slightly from record highs, and are more closely correlate with unemployment data. The unemployment rate dropped to 5.1% in August, a decline of 1.0% over the previous 12 months and a seven-year low.

We expect our prime indices to retreat slightly from their near records. Chargeoffs will rise while gross yield and monthly payment rates will decline slightly. However, we expect delinquency rates (60+ days) to remain unchanged.

Our retail metrics should see an increase in delinquencies. Fitch's other retail metric categories will be mixed, overall. We expect chargeoffs and MPR (a measure of how quickly cardholders pay back their balances) to decrease while gross yield will rise.

This preliminary data reflect the July reporting period (as of Aug. 31, 2015) and September distribution date. Actual results will be available in early October.

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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View source version on businesswire.com: http://www.businesswire.com/news/home/20150929006800/en/

Fitch Ratings
Stephanie Lobaccaro
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Herman Poon
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Source: Fitch Ratings

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