The company's prediction of rising amounts of bad credit card debt until some time in 2009 carries "no immediate ratings implications" for securities backed by the receivables, according to a statement yesterday from Moody's, a credit-ratings firm.
"Both the charge-off and the delinquency rates are clearly on the rise and, in the coming months, will likely continue to rise," William Black, a senior vice president, said in the statement.
More Americans are struggling to repay their card debt, with charge-off rates rising from the depressed levels that followed a spike before bankruptcy law changes in 2005.
In November, the most recent month for which data are available, the rate was below 5 percent, less than the historical average of 5.5 percent, according to Moody's. After the last recession, charge-offs peaked at 7.1 percent in May 2003, Moody's said.
Rising credit-card losses so far have prompted only a "moderate" tightening of standards at issuers such as American Express Co., Capital One Financial Corp., and Discover Financial Services, Eric Wasserstrom, a UBS AG analyst, said last week.
Prime credit-card charge-offs increased by 0.15 percentage points last month, to 5.36 percent, Fitch Ratings said. Fitch expects charge-offs rates to rise at least 35 percent this year.
Moody's said it expects other measures of card performance, such as the amount of repayments by borrowers and the amount of yield charged on the debt, to "remain strong."
news source : http://www.boston.com/
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