The performance of credit card ABS, particularly charge-off levels, will remain near current levels in the U.S., the U.K. and Canada through the end of 2013, as the steady improvement in performance since the end of the recession tails off, according to a report published this morning by Moody’s Investors Service. However, collateral performance in Canada, particularly charge-offs, will be relatively more sensitive to shifts in the country’s unemployment rate than is the case in the U.S. and the U.K.
Consistent with low and stable charge-off levels, payment rates will remain near their current levels in all three regions, Moody’s said. In the U.S. and Canada, the payment rates are currently near their five-year highs, reflecting the larger proportion of convenience users remaining in collateral pools in the wake of the recession. Yield and excess spread will also remain at or above current levels.