Prime credit card ABS performance registered positive gains across the board in August, but retail card ABS didn’t fare as well, according to the latest monthly index results from Fitch Ratings.
On the prime card ABS side, all major variables improved, including charge-offs, delinquencies, yield, monthly payment rate (MPR) and excess spread.
Fitch’s 60+ Day Delinquency Index for August (covering the July collection period) registered another record low in dropping four basis points (bps).
Late stage delinquencies, which are accounts that are delinquent in excess of 60 days, fell to 1.30%, for the fifth consecutive month.
Charge-offs also improved for the fourth straight month, registering another 25 basis point drop to 3.37%. Current loss levels in prime credit card ABS have plunged to levels not seen in over seven years and are 29% lower year-over-year.
Excess spread on a three-month average basis increased 37 bps in August to 12.32%. Fitch said that “robust excess spread levels provide ample cushion for the trusts and their investors.”
The results were more mixed on the Retail side. Retail charge-offs for example, declined for the third consecutive month, dropping further 27 bps to 6.08%. Losses have also declined 11.88% since the same period last year.
Late stage delinquencies have remained relatively flat and averaged 2.30% for the last three months.
Both gross yield and excess spread worsened in August for retail card ABS. According to Fitch, gross yield declined 34 bps month over month at around 27%, while three month average excess spread levels also fell 95 bps to 16.10%.
Fitch expects ABS ratings on both prime and retail credit card trusts are expected to remain stable “given available credit enhancement, loss coverage multiples, and structural protections afforded investors.”