NEW YORK, Feb. 8 /PRNewswire/ -- Standard & Poor's today placed its
ratings on various classes of series 2001-1 and 2000-1 issued by NextCard
Credit Card Master Note Trust on CreditWatch with developing implications (see
list).
This rating action follows the Office of the Comptroller of the Currency
(OCC) announcement that NextBank NA, Phoenix, Ariz., was closed on Feb. 7,
2002 by the OCC and the FDIC was appointed receiver. NextBank NA is the
transferor of receivables to the trust and the servicer of the credit card
accounts.
The documents under which the notes are issued include a list of
redemption events that will cause the trust to begin to use principal
collections allocable to each series to retire the notes early. Early
redemption events are viewed as a structural form of credit enhancement that
will accelerate note repayment under certain adverse conditions. The early
return of principal may have a positive affect on credit quality. The
receivership of NextBank NA is a redemption event. However, as disclosed in
the NextCard Credit Card Master Note Trust offering memorandum, the FDIC may
have the power to prevent the commencement of an early amortization period.
The FDIC has not yet publicly stated whether it will attempt to prevent the
commencement of the early amortization period. Standard & Poor's is in contact
with the FDIC and will advise the market as soon as a decision has been made.
There is a risk that servicing may be adversely affected by the closure and
receivership of NextBank NA.
Although excess spread continues to provide a significant cushion against
increasing receivable charge-offs, portfolio performance has deteriorated and
has been volatile during the last year. In 2001 the average gross charge-offs
were 6.71% and annualized monthly gross charge-off rates ranged between 2.87%
and 10.94%. Excess spread or portfolio yield after deductions for investor
coupon payments, receivable charge-offs and servicing fees averaged 5.42% in
2001, with an annualized monthly range of 4.13% to 6.82%. The most recent
monthly servicer report indicated that annualized gross charge-offs and excess
spread for the month of December was 10.81% and 4.23%, respectively.
Standard & Poor's will continue to monitor the performance of the
aforementioned transactions and the resolution of the bank by the FDIC.
RATINGS PLACED ON CREDITWATCH DEVELOPING
NextCard Credit Card Master Note Trust
Series 2000-1
Class Rating
To From
A AAA/Watch Dev AAA
B A/Watch Dev A
C BBB/Watch Dev BBB
D BB/Watch Dev BB
RATINGS PLACED ON CREDITWATCH DEVELOPING
NextCard Credit Card Master Note Trust
Series 2001-1
Class Rating
To From
A AAA/Watch Dev AAA
B A/Watch Dev A
C BBB/Watch Dev BBB
D BB/Watch Dev BB
SOURCE Standard & Poor's
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Related links:
http://www.standardandpoors.com/ratings
CONTACT:
Patrick Coyne, +1-212-438-2435, Bonnie Lee
Tillen, +1-212-438-2624, Joseph F Sheridan, +1-212-438-2605, or
Thomas G Gillis, +1-212-438-2468, all of Standard & Poor's
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