US credit ratings agency Moody's out with a report on credit card use 15 Feb
Hot on the heels of my posting about concerns on UK wages and household debt comes this timely report from Moody's catchily entitled "Credit Card ABS - United Kingdom: Riskier Portfolios Offset By Stronger Sponsors In UK Credit Card ABS Versus European Peers"
Say Moody's:
UK consumers are among the most highly leveraged in Europe; the cost of servicing household debt versus net disposable income is also among the highest in the European Union. Consequently, UK consumers are more exposed to economic shocks, all else being equal.
The UK's use of credit cards versus most other European markets is disproportionately high: in 2015, UK cardholders - including corporate and consumer entities - used their card 224 times a year, versus 154 times in France, 130 times in Ireland, 64 times in Spain, 45 times in Germany and 13 times in Greece.
UK credit card consumers are among the most highly leveraged in Europe, and are therefore more vulnerable to economic shocks. That said, mainstream UK credit card asset-backed securities (ABS) have strong sponsors, which are typically more creditworthy than other European counterparts.
"Credit cards are a mainstream product in the UK, which by definition captures a cross-section of society, implying more varied risks and credit profiles," says Lisa Macedo, Senior Analyst
"A strong sponsor reduces the chances of a credit card ABS issuance programme entering financial distress and early amortisation. Its credit status is the main anchor point in our ratings analysis,"
Full report here courtesy of our good friends at Livesquawk.
It neatly backs up my previous thoughts and concerns, most recently this morning, about UK household debt.
