After several weeks of reaping retribution for its scorching and somewhat precarious rise, subprime mortgage performance continues to inspire worries of spillover effects into other ABS sectors. While it is too early to definitely say whether subprime mortgage performance will affect the auto ABS (see story p.7) sector, market participants say, they point to a set of perfected practices that so far make credit card ABS deals immune to the recent volatility in mortgages.

Unlike the mortgage industry, which expanded rapidly on the strength of an array of affordable products, few credit card issuers have aggressively chased subprime business in the last several years. That is partly because bank regulators forced card issuers to shift their focus to highly rated customers by making it difficult for banks to pursue subprime business, according to Mary Kane, Citigroup Global Market's director of ABS strategy and analysis. Taking the hint from regulators, and going one step further, Capital One reduced its subprime exposure to 30% of its portfolio, from about 40%.

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