TEXT - Fitch expects to rate Discover Bank's snr notes 'BBB'
Feb 13 - Fitch Ratings expects to rate Discover Bank's (a wholly owned subsidiary of Discover Financial Services, with a long-term Issuer Default Rating of 'BBB') senior unsecured notes 'BBB'. The notes are expected to mature in 2018. Issuance proceeds are expected to be used for general corporate purposes. Fitch expects Discover to be an opportunistic issuer of bank notes over time, which will serve to enhance the company's funding flexibility. KEY RATING DRIVERS Discover's Stable Rating Outlook reflects the expectation for earnings consistency, moderate portfolio growth, peer-superior asset quality, and the maintenance of strong liquidity and risk-adjusted capitalization. While Discover will reduce capital ratios to its targeted range over time, Fitch expects the bank to do this in a prudent manner. Increased revenue diversity, proven competitive positioning and credit performance in non-card loan categories over time, enhanced funding flexibility and/or further clarity on regulatory and legislative issues, particularly as it relates to the student loan sector, could support positive rating momentum. Conversely, negative rating action could be driven by a decline in earnings performance, resulting from a decrease in market share or credit deterioration, a weakening liquidity profile, significant reductions in capitalization, and legislative and/or regulatory changes that alter the earnings prospects of the credit card and student loan businesses. Negative rating momentum could also be driven by an inability of Discover to maintain its competitive position and earnings prospects in an increasingly digitized payment landscape. While the company is focused on strategic acquisitions and alliances to expand its online and mobile capabilities, competition from technology companies and social networks, with access to significant consumer data, is expected to intensify. Discover is a leading credit card issuer and electronic payments company that authorizes, processes, and guarantees the settlement of cardholder transactions on the Discover, PULSE, and Diners Club networks, and extends credit on a revolving basis to Discover cardholders. The company had $61 billion in loan receivables at Nov. 30, 2012 and its stock is listed on the NYSE under the ticker symbol DFS. Fitch expects to assign the following rating: Discover Bank -- Senior unsecured debt at 'BBB'. Fitch currently rates Discover as follows: Discover Financial Services -- Long-term Issuer Default Rating (IDR) 'BBB'; -- Short-term IDR 'F2'; -- Viability Rating 'bbb'; -- Senior debt 'BBB'; -- Preferred stock 'B+' -- Support '5'; and -- Support Floor 'NF'. Discover Bank -- Long-term IDR 'BBB'; -- Short-term IDR 'F2'; -- Viability Rating 'bbb'; -- Short-term deposits 'F2'; -- Long-term deposits 'BBB+'; -- Subordinated debt 'BBB-'; -- Support '5'; and -- Support Floor 'NF'. The Rating Outlook is Stable.
We are living longer but not creating financial plans to keep pace. Advisers give tips on how to make sure you don’t outlive your money. Video