European consumers may be feeling the stress that comes with interest rate hikes, but at the moment, it has not translated into any immediate effect on the performance of credit card securitization portfolios. In a seminar on the sector held last week, Fitch Ratings said that even for subordinated bonds, transactions still had some time before breeching default breaking points.

"Securitized credit card receivables are a popular asset class in Europe and this trend is expected to continue in 2005," said a Fitch analyst speaking at the seminar. "Tighter spreads have encouraged investors to move down the ratings scale." The analyst added that spreads for card assets were at 20 basis points over Libor in 1995 when Fitch began rating the asset class. Today spreads have moved in to 10 basis points over Libor, making it more challenging for investors to get some arbitrage on credit card deals.

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