Bonds backed by card payments may face rating cuts as rising unemployment and an economy sliding deeper into a recession make it harder for consumers to pay their bills, according to Standard & Poor's Corp.
"Our outlook for the credit card sector is negative," the New York rating agency said Tuesday. Prospects for securities rated A and below are "negative," S&P said, though debt rated AAA remains "relatively stable."
S&P said the percentage of card accounts that were delinquent last month rose 100 basis points from a year earlier, to 5.3%.
Household savings rates have declined in recent decades, S&P said, while the level and cost of debt has climbed. Because the current environment for credit is "unique and unprecedented," the agency said, the effects on asset-backed securities tied to credit cards may deviate from historical trends.