TEXT-S&P says U.K. credit card ABS new issuance rebounds in Q2 2012
Sept 14 -
-- In Q2 2012, the performance indicators of our U.K. credit card ABS index remained stable despite the deteriorating economy.
-- Charge-offs and delinquencies decreased quarter-on-quarter, while the payment rate and yield have remained consistent.
-- New issuance increased to EUR4.6 billion in the first half of 2012 and is now at levels comparable with 2002.
Standard & Poor's Ratings Services has published its Q2 2012 U.K. credit card ABS index report, which shows that the credit performance of transactions in our index remained stable despite tough economic conditions, such as low consumer confidence, decreasing GDP, and persistently high unemployment.
"The stable credit performance of U.K. credit card ABS master trusts despite persistently high unemployment rates reflects our view that the volume of delinquencies is more sensitive to absolute changes in the number of those newly unemployed," said credit analyst Tim Mulligan.
Economic pressures have not affected charge-offs and delinquencies, which decreased quarter-on-quarter. Charge-offs decreased by 36 basis points (bps) since Q1 2012 to 6.12%, while total delinquencies decreased by 33 bps to 3.51%. We expect originators to play an important role in reducing charge-offs through active management of those accounts that begin to fall into arrears.
New issuance amounted to EUR4.6 billion in the first half of 2012, which is relatively high, compared with EUR3.1 billion of new issuance in the first half of 2011. New issuance levels have increased from the low observed in 2009 (when total issuance amounted to EUR951 million), and are now at levels comparable with 2002 (EUR5.5 billion).
Mr Mulligan added: "This increase, in our opinion, reflects investors' appetite for securitizations backed by U.K. credit card receivables and banks' readiness to use securitization as a funding source."
RELATED CRITERIA AND RESEARCH
-- U.K. Credit Card ABS Index Report Q2 2012: The Economy Worsens, But New Issuance Rises And Delinquencies Fall, Sept. 13, 2012
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