Fitch Ratings has said that the rising pressure to cut interest rates charged on credit card loans should not have an immediate impact on the ratings of three outstanding Fitch-rated credit card ABS transactions, all originated by AEON Thana Sinsap (Thailand) Public Company Limited (AEONTS, rated ‘BBB+(tha)’/'F2(tha)’).
Fitch has factored various stress scenarios into its rating analysis including reduced interest rates, and each of the three pools has relatively strong yields and excess spreads. While the rate cuts could alleviate some pressure on cardholders, the agency still expects a rise in credit card defaults and falling monthly payment rates due to the severe economic contraction.
Fitch currently forecasts that Thailand’s GDP will contract by 3.8% in 2009. Since late 2008, Thailand’s central bank has lowered the benchmark one-day repurchase rate by 250bps to 1.25%. Until recently, the lending rate cuts by Thai banks were more in the area of reference rates used in wholesale banking and some parts of consumer banking not related to credit card loans. However, on 28 May 2009, Bangkok Bank Public Company Limited announced an interest rate cut on credit card loans by 200bps, effective 1 July 2009.
This may lead other credit card operators to cut their rates. According to AEONTS management, the company does not plan to reduce rates on credit card loans for the time being, given its low income and higher risk customer base. For Fitch-rated Thai credit card ABS transactions, the performance of the portfolios’ default rates has been satisfactory when compared to Fitch’s base case assumptions.
This is despite average default rates for the first four months of 2009 being somewhat higher than those of 2008 for the portfolios of Eternal 3 Special Purpose Vehicle Company Limited (Eternal 3) and of Eternal 4 Special Purpose Vehicle Company Limited (Eternal 4). Notwithstanding the expected rise in delinquencies, Fitch believes that its ratings on Thai credit card ABS transactions should be able to withstand the challenging economic conditions supported by the transactions’ credit enhancements. With an exception of the most junior tranche (class C) of Eternal 3 which is currently assigned a Negative Outlook, all debentures of the three aforementioned credit card ABS transactions currently have Stable Outlooks.
–www.theasianbanker.com (June 3 2009)–
ที่มา
Asian Banker
REF:Thaipr.net
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