Kroll Bond Rating Agency has never rated credit card ABS but its new rating methodology for U.S. credit card asset-backed securities published yesterday is an indication that the ratings agency is gearing up to rate deals this year.
“We would definitely love to become active in the space and that’s why we are publishing our criteria,” said a spokesperson at the ratings agency.
Kroll has quickly gained traction in the CMBS space since it began rating the bonds in 2011. Kroll rated 33 CMBS deals in 2012 and 6 in 2011. The ratings agency has also rated 6 of Redwood Trust’s RMBS deals in 2012 and one in 2013. In the consumer space, Kroll rated 3 auto ABS deals in 2013 and one so far this year; and it also rated its first container ABS deal in 2012.
Kroll’s rating of a credit card ABS transaction incorporates an analysis of the quality and expected performance of the underlying collateral, the originator’s and servicer’s business model and operational capabilities and the transaction terms, including capital structure, credit enhancement and legal structure.
Kroll assigns ratings to credit card ABS using its short-term and long-term rating scales depending on the securities being rated.