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Increasing charge-offs boosted credit card losses in June to a record 10.44% of receivables that have been placed into securitization trusts, which helped narrow profit margins for card securitizations to less than 5% for the first time in nearly 10 years, according to the latest Fitch Ratings credit card indexes. Excess spread for credit card asset-backed securities, which measure the difference between a security's revenue and expenses, compressed to 4.83% in June from 5.30% in May, Fitch reports. "Excess spread remains a key measure of credit card [asset-backed securities] performance as it protects credit card [asset-backed securities] investors against early amortization and potential losses," Michael Dean, Fitch managing director, said in a statement. "The declines we have seen recently have been muted somewhat by issuers' actions to offset the rapidly rising charge-off environment." Fitch analysts expect increases in charge-offs to slow in the coming quarter, but they do not expect to see improvements in charge-off rates during that time.
