S&P: 119 U. S. Private-Label Credit Card ABS Trust Ratings Affirmed From Four Originators
We reviewed the trusts as part of our shelf review for all of the U. S. private-label credit card trusts that we rate (see related commentary article, "Shelf Review: U. S. Private-Label Credit Card ABS," which will be available on RatingsDirect shortly following the publication of this press release. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@spglobal. com).
As part of our review, we assessed and updated our current base-case assumptions and stresses to the key performance variables (yield, charge-off/loss rate, and payment rate) that we use when analyzing and modeling credit card ABS. In addition, we incorporated other trust-specific trends, including delinquency, dilutions, quality and consistency of pool stratification, underwriting and account management, peer analysis, and sensitivity to potential shifts in pool composition from changes in merchant relationships. Our review is based on forward-looking assumptions and incorporated our views on the retail sector (see "July U. S. Retail Sales Update: Sales Growth Was Flat After Three Consecutive Months Of Gains," published Aug. 12, 2016) and certain macroeconomic variables, including the unemployment rate.
Overall, the private-label credit card receivables' performance has been generally stable since our last shelf review in 2014. We believe that this is a result of the relatively benign economy, stable pool composition, and changes the originators made to their underwriting standard following the recent recession, which resulted in highly seasoned pools with higher FICO scores. Nevertheless, we expect asset quality to deteriorate slightly in the near term, reflecting portfolio growth and somewhat loosening credit standards.
Based on our U. S. private-label Credit Card Quality Index, we observed the following performance trends as of June 2016:Principal receivables totaled $32.97 billion, down 8.5% year over year and down 11.1% from April 2014.Charge-offs totaled 4.4%, down 2.5% year over year and down 9.7% from April 2014.30-plus-day delinquencies were 2.8%, up 5.2% year over year and down 6.0% from April 2014.The total payment rate was 19.2%, down 0.8% year over year and up 4.8% from April 2014.Yield was 26.3%, down 0.2% year over year and down 0.8% from April 2014.The excess spread rate was 18.2%, down 1.0% year over year and up 3.3% from April 2014.We will continue to monitor the performance of the credit card receivables backing these transactions relative to the credit enhancement available to each class.