Standard & Poor’s said that year to date volumes for in Credit Card ABS have surpassed the $8 billion pace set in 2012 but consumer aversion to credit card debt is likely to keep issuance volumes below its forecasted $40 billion total for 2013.
U.S. households have cut debt by $858 billion, from the peak point of debt in Q3 2008 to Q4 2012, according to a Citigroup report.
“Performance of our Citi Credit Card Index highlights that a less leveraged consumer is benefitting consumer credit behavior, said analysts in a April 18 report on the sector. “In February, credit card index charge-offs and delinquencies registered 3.45% and 2.46% respectively. Credit performance equals or surpasses the pre-crisis best level.”
But better consumer behavior has resulted in high payment rates and account removals. Analysts at BofA Merrill Lynch said in a April 15, report that in March Citibank removed $12 billion and $15 billion of receivables from its Citibank Credit Card Issuance Trust and Omni trust, respectively.
“We expect funding diversification rather than receivables growth to be supportive of new issue volume in the credit card sector,” said the BofAML analysts. The bank has also revised its forecast but at $45 billion the forecast still beats S&P’s expectations.
Deals this week
Discover’s new deal, a single tranche offering of triple-A rated, class A notes was upsized to $900 million from $500 million. The deal priced that 2.94 -year notes at 18 basis points over the one month Libor, according to a source familiar with the deal. S&P said that it “expects Discover's master-trust loss rates to remain stable in 2013 based on the current pool composition.”
Citibank is also prepping a new deal to be issued from its Citibank Credit Card Issuance Trust, according to a deal prospectus filed on Monday with the U.S. Securities and Exchange Commission.
The Class 2013-A1 notes are underwritten by Citigroup, BofA Merrill Lynch, Credit Suisse, RBS, JP Morgan and RBC Capital Markets.
The deal prospectus did not indicate how large the tranche would be sized but the trust has 29 subclasses of notes outstanding with an aggregate outstanding dollar principal amount of $19.2 billion.