The performance of bonds backed by credit-card loans will improve as issuance declines in 2012, according to Moody’s Investors Service.
Offerings have dropped as banks fund new credit-card accounts with alternative sources such as deposits, the New York-based rating company said in a statement today.
Some credit-card companies are beginning to loosen underwriting guidelines, though they are not adding new originations of lower credit quality to asset-backed deals, according to Moody’s.
“So long as issuers don’t add receivables from new accounts to the securitizations, the credit mix won’t deteriorate from current levels,” Moody’s analyst Luisa De Gaetano wrote in the report.
Sales of bonds linked to credit card payments have plunged as banks turn to deposits to finance the borrowing. During the past two years, $18 billion of the debt has been issued, compared with $47 billion in 2009, according to data compiled by Bloomberg.
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