Fiducitation: Credit Card Securitization
Author:
Shahjehan
Cheema, John Munson
Date:
September 13, 2001
© 2001 Fiducite.com, Inc.
Fiducitation: A synthesis of public Internet resources on
the topic.
Instructions: Use the Table of Contents to navigate the
document. Each citation has up to four distinct parts: Annotation, Clip,
Source, and Cached File. Our Annotation and Clip (text or
graphic from source document) help you decide whether to view the document. The
source document may be viewed by clicking on the Source URL or by
opening the embedded Cached File. All information is attributed to its
source.
Table of Contents:
Overview of Credit Card Securitization
This Fiducitation covers the facts about credit card securitization in
the US, details some of the major deals in the last year, and provides
information on the leading issuers, the major rating agencies and the leading
underwriters.
ABCs of Credit Card ABS
Annotation: This 6 page report is an excellent
overview of the credit card securitization market.
Clip: The credit card
industry experienced rapid growth throughout the 1990s, with receivables
outstanding increasing from $185 billion in 1990 to $572 billion outstanding at
year-end 2000.
Source: http://www.fitchinv.com/corporate/reports/report.cfm?rpt_id=124310
Cached
File:
Facts About Credit Card Securitization 2001
Annotation: a general overview of the mechanics
and variables of credit card securitization
Clip: The outstanding
feature of credit card securitisation is the short cycle of the receivable - it
is paid off within 4-5 months. Therefore, the usual amortization structures
used in auto loans, etc. does not work handy in credit cards.
Source: http://www.vinodkothari.com/creditcar.htm
Cached
File:
Credit Card C-Piece Secretes
Annotation: very detailed and comprehensive
report looking at credit card c-pieces, an enhancement structure of credit card
asset-backed securities (abs).
Clip: Although credit card ABS has been considered one of the most stable and widely accepted asset classes in the ABS market, it is only recently that the C-pieces on credit card ABS have gained more acceptance and sparked innovative structural developments.
Source: http://www.fitchinv.com/corporate/reports/report.cfm?rpt_id=124482
Cached
File:
Structured Finance - Credit Card Criteria
Annotation: broad ranging overview of credit
card receivables from Standard & Poor’s rating services - (see pp.6, 15,
21, 23, 41, 47-50, 64-74, 76-79)
Clip: One of the most important aspects of any credit risk assessment is the review of the originator’s operations. In this review, emphasis is placed on the originator’s marketing, underwriting, and servicing operations. A rating is based on the representations of the parties to the transaction, but the scope of the review does not include an audit.
Cached File:
Risk and competition in the credit card industry
Annotation: working paper from 1998 with good
chart exhibits, see figures 9, 15, 17 & 18 at bottom of page for historical
perspective on credit card securitization.
Clip: The term "convergence" refers to the growth of securitization of bank loans. Securitized credit card debt has grown from zero to over $ 220 billion in 1997 (Figure 15). By then about half of the credit card debt was securitized (Figure 9). Some banks have securitized more than two-thirds of their credit card portfolio (Capital One 1998).
Source: http://munshi.sonoma.edu/working/cc/cc.html
Cached
File:
Trading and Capital-Markets Activities Manual
Annotation: federal reserve's capital-market
review manual. See supplement 5-april 2001 on pdf-document pages 3-6 and table
of contents on pdf-page 16 -- section 3020.1 Securitization And
Secondary-Market Credit Activities.
Clip: The manual codifies current procedures used in the review of capital-markets and trading activities. It discusses the risks involved in various activities, risk-management and -measurement techniques, appropriate internal controls, and the examination process from the following perspectives:
Source: http://www.federalreserve.gov/boarddocs/supmanual/trading/trading.pdf
Cached
File:
The following articles and press releases regarding credit card securitization are in chronological order:
Credit-Card Losses Keep Climbing June 2001
Annotation: brief article commenting on
S&P's monthly index of securitized credit card receivables.
Clip: Losses among securitized credit-card accounts rose for the third consecutive month in May - and the trend shows no signs of abating.
Source: http://www.absnet.net/include/showfreearticle.asp?file=/headlines/aba.htm
Cached
File:
U.S. credit card ABS supply grows, Amex sells deal April 2001
Annotation: press release on American Express
co. Credit card securitization with some insight into market and reasons for
increased interest in floating rate paper.
Clip: Market
participants have favored short- to medium-term variable rate bonds like ABS,
given the wild swings in the stock and bond markets and uncertainty over how
aggressively the Federal Reserve would lower interest rates to revive a slowing
U.S. economy.
Source: http://www.forbes.com/newswire/2001/04/10/rtr232275.html
Cached
File:
Department Of Labor Proposes Expansion of ASB Exemptions August 2000
Clip: The Department of Labor has proposed an amendment to the “underwriter exemptions,” individual exemptions that provide relief from certain ERISA prohibitions for the operation of asset pool investment trusts and for the acquisition, holding and disposition of asset-backed and mortgage-backed certificates by ERISA governed investors.
Source: http://www.mayerbrown.com/legal/teig_aug00.pdf
Cached
File:
Consumer Federation of America- Recent Trends July 1998
Annotation: this article has some interesting
statistics, including which banks extend the most credit and do so the most
prudently. Look for highlighted text.
Clip: Just as the
portion of credit card debt held by banks has increased recently, so too has
the portion held by a few big banks. As the table below shows, at the end of
last year, a few banks held more than half of all bank card debt.
Source: http://www.abiworld.org/research/cfa_credit_study_7-98.html
Cached
File:
Charts, Tables, Graphs and General Information on Credit Card as well as other forms of Securitization
Standard & Poor’s Report on Credit Card Securitization Performance
Clip: Credit card
charge-offs for securitized U.S. credit card banks rose substantially by 60
basis points (bps) in April 2001, according to Standard & Poor's Credit
Card Quality Indexes.
Cached
File:
Moody’s Forecasts Bank Credit Card Segment of U.S. ABS
Clip: The bank
credit-card backed segment of the U.S. public asset-backed securities (ABS)
market should reach a record-breaking $54 billion of issuance is 2001, up
almost 25% from last year's $44 billion, says Moody's Investors Service in its
annual outlook on the segment.
Cached
File:
Moody’s Forecasts Private Label Credit Card Segment of U.S. ABS
Clip: The private label
credit-card segment of the U.S. asset-backed securities (ABS) market is
expected to grow 28% in 2001 to approximately $5.5 billion worth of issuance,
says Moody's Investors Service in an annual review and outlook report.
Cached
File:
Standard & Poor's Report on CC Securitization Performance
Clip: Credit card charge-offs for securitized
U.S. credit card banks rose substantially by 60 basis points (bps) in April
2001, according to Standard & Poor's Credit Card Quality Indexes.
Cached
File:
Moody's Forecasts Private Label Credit Card Segment Of U.S. Abs
Clip: The private label
credit-card segment of the U.S. asset-backed securities (ABS) market is
expected to grow 28% in 2001 to approximately $5.5 billion worth of issuance,
says Moody's Investors Service in an annual review and outlook report.
Cached
File:
Credit Cards: Use and Consumer Attitudes September 2000
Annotation: Federal reserve board research report on consumer
related credit card issues, relates good data on total (non-mortgage)
outstanding consumer credit which can be used for sizing the market.
Clip: Credit cards have
also become the primary source of unsecured open-end revolving credit, and they
have largely replaced the installment- purchase plans that were important to
the sales volume at many retail stores in earlier decades.
Source: http://www.federalreserve.gov/pubs/bulletin/2000/0900lead.pdf
Cached
File:
This section contains one list of deals by aba.com, and several press releases from major issuers detailing their deals. The collection of press releases is not meant to be exhaustive, but rather to give you a sample of issuers.
ABSNet - DEALS
Annotation: Lists all the issuers of credit
card securities in April - may 2001 in us, the total amount securitized, and
the number of deals each issuer has made.
(Note: to see other documents on this site, a free registration will be required.)
Source: http://www.absnet.net/WebSite/deals/browseassetclass.asp?AssetClass=cr&tab=browsedeals
Cached
File:
ABSNet - Deal Summary For Providian May 2001
Annotation: An example of abs net’s deal summaries is given here using Providian bank.
Cached
File:
Advanta Prices Securitization Backed by Small Business Credit Card Receivables April 2001
Annotation: 'Press release from Advanta
corporation regarding recent pricing of business credit card securitization.'
Clip: Advanta Business Card Master Trust Series 2001-A consists of receivables in a portfolio of business revolving credit card accounts. The portfolio backs four classes of seven year, floating rate notes: $240 million of Class A Notes, $28.5 million of Class B Notes, $21 million of Class C Notes and $10.5 million of Class D Notes.
Source: http://biz.yahoo.com/bw/010403/2696.html
Cached
File:
AT&T unit to securitize $1 billion of credit card receivables May 1997
Source: http://www.att.com/press/0597/970507.uca.html
Cached
File:
Fleet Credit Card Services Prices Credit Card Securitizations October 2000
Annotation: press release from fleet credit card services regarding
pricing of credit card securitization.
Clip: The transaction, Fleet Credit Card Master Trust II, Series 2000-D, consists of one class of fixed rate certificates, one class of floating rate certificates and one class of floating rate notes. The $733.5 million senior Class A certificates has an expected average life of approximately 5 years, a coupon that will reset monthly and was priced at one-month LIBOR plus 14 basis points.
Source: http://www.fleetcards.com/info/pressroom.asp?press=19
Cached
File:
MBNA securitized credit card receivables regularly in the past year. This folder contains mbna press releases detailing these transactions.
MBNA Credit Card Securitization Press Releases
Annotation: MBNA press release page. By
scanning this page you can see how often and for how much MBNA has securitized
credit card receivables.
Source: http://www.prnewswire.com/cgi-bin/micro_site.pl?Tick=mbna
Cached
File: 
MBNA Securitizes $1.0 Billion
Clip: WILMINGTON, Del., May 18 PRNewswire-- MBNA Corporation (NYSE: KRB) announced today that MBNA America Bank, N.A., its wholly owned subsidiary, will issue $1.0 billion in credit card asset backed notes through the new MBNA Credit Card Master Note Trust.
Cached
File: 
MBNA Securitizes $750 Million Feb. 23, 2001
Clip: WILMINGTON, Del.,
Feb. 23 /PRNewswire/ -- MBNA Corporation (NYSE: KRB) announced today that MBNA
America Bank, N.A., its wholly owned subsidiary, will issue $750 million of
ten-year credit card asset backed securities. The securitization from the MBNA
Master Credit Card Trust II features two classes of publicly traded securities
(Class A and Class B).
Cached
File:
MBNA Securitizes $1.0 Billion Aug. 24, 2000
Cached
File:
MBNA Securitizes $750 Million Nov. 8, 2000
Cached
File:
MBNA Securitizes $500 Million Dec. 6, 2000
Cached
File:
Rating Agencies
The rating agencies below are the three major rating agencies in the US.
Standard & Poor's Ratings Definitions
Clip: A Standard & Poor's issue credit rating is a current opinion of the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium term note programs and commercial paper programs).
Source: http://www.standardandpoors.com/ResourceCenter/RatingsDefinitions.html
Cached
File:
Moody's Ratings Definitions
Clip: Moody’s maintains five issuer rating systems: Senior Unsecured, Counterparty Ratings, Bank, Municipal and Senior Implied ratings.
Source: http://www.moodys.com/moodys/cust/staticcontent/2000200000265735.asp?section=rdef
Cached
File:
Fitch Credit Card Securitization Group
Clip: Fitch's presence in this sector has grown with market acceptance of its industry standard criteria for rating subordinate tranches of credit card securitizations and its widely tracked performance indexes.
Source: http://www.fitchibca.com/corporate/sectors/credit_cards.cfm?sector_flag=1&marketsector=2
Cached
File:
The citations below are included to give examples of Fitch ratings.
Fleet Credit Card Master Trust II
Source: http://www.fitchinv.com/corporate/ratings/issr_rtng.cfm?issr_id=6276
Cached
File:
MBNA Master Credit Card Trust
Source: http://www.fitchinv.com/corporate/ratings/issr_rtng.cfm?issr_id=3793
Cached
File:
First USA Credit Card Master Trust
Source: http://www.fitchinv.com/corporate/ratings/issr_rtng.cfm?issr_id=6104
Cached
File:
Top Underwriters of Public ABS in 2000, by Collateral Type
Source: http://abalert.com/Public/MarketPlace/Ranking/index.cfm?files=disp&article_id=49112
Cached
File: