Credit Card Bond Sales at Zero, First Time Since 1993

geoffky

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Nov. 5 (Bloomberg) -- Credit card companies were shut out of the market for bonds backed by customer payments in October for the first time in more than 15 years, as investors shunned the debt amid the global credit freeze.

A weakening job market and a looming recession are making it harder for consumers to make monthly payments, eroding confidence among investors about the safety of credit-card-backed bonds. It's the first month since April 1993 that there have been no sales, according to Wachovia Corp. data. Issuers sold $17.1 billion of the debt in October 2007, the data show.

``Nobody is eager to put money to work given the uncertainty in the market,'' said James Grady, a managing director at Deutsche Bank AG's asset management unit. ``When you think it can't get worse, it continues to get worse. There is not a demand'' for these bonds.

geoffky

This is BAD if they cant pass the debt on they will not be able to give out more credit.All bets are off if this happens...

ad44downey

This is the next logical step in the Financial meltdown. Lets see if dropping interest rates by 1.5% defuses this timebomb!

PasturesNew

geoffky wrote: »

This is BAD if they cant pass the debt on they will not be able to give out more credit.All bets are off if this happens...

And have you seen the trouble William Hill's in!

http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article5114368.ece

luvpump

But I thought The Crisis had been cancelled after the rate cut ??? :cool: In reality Rates could be zero & it will make little differance, The Economy simply has to collapse to a sustainable level & we are a long way from that !! As i reported 10 days ago, consumers are turning to plastic as a last resort, once thats gone, all bets are off !!... & as I have stated many times 2009 is going to be bloodbath, be prepared ..

http://forums.moneysavingexpert.com/showthread.html?t=1253111

epz_2

PasturesNew wrote: »

And have you seen the trouble William Hill's in!

http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article5114368.ece

I really dont understand how a bookie can have 1.2 billion debt, essentially they are just farming money, the infrastructure costs must be tiny, its not like a builder who has has to invest in land and materials months before a sale.

mean_momma

geoffky wrote: »

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Nov. 5 (Bloomberg) -- Credit card companies were shut out of the market for bonds backed by customer payments in October ....,,, harder for consumers to make monthly payments, eroding confidence among investors about the safety of credit-card-backed bonds. There is not a demand'' for these bonds.

As a 'hard pressed saver' I know not a lot about esoteric bonds, but anyone with common sense wouldn't touch 'hard pressed borrower' bonds with a barge pole! Especially since it appears not to be politically correct to expect the debt to be paid!

amcluesent

>wouldn't touch 'hard pressed borrower' bonds with a barge pole<

So many peeps using their CC to pay mortgage for a month or two before the inevitable repo and bankruptcy. Anyone holding that debt will get at best a few pence in the £.

WTF?_2

ad44downey wrote: »

This is the next logical step in the Financial meltdown. Lets see if dropping interest rates by 1.5% defuses this timebomb!

Don't worry - if slashing interest rates fails they can always ..... slash them some more!

Some people here don't seem to get that the big problem is availability of credit. Cutting rates doesn't do anything to make it easier to get credit, in fact it can make it harder. And the gap between base rates and how much it costs the borrower is likely to widen.

During Japan's lost decade, they tried lower interest rates all the way to zero. However, if you were Japanese and you wanted to borrow some money you paid considerably more to do so than zero percent - if you could get the credit at all.

The responsible way to solve credit availability is to encourage people to build up decent savings which can then be loaned sensibly. i.e. to people with good credit records who will repay them, not any old idiot what wants a holiday in the Caribbean and a 4x4.

Kez100

we have kept back a few months of credit card spending wondering if by Christmas they would pull some cards completely. We pay everything off though and always have so we must be a good business proposition albeit a low margin one.

moanymoany

luvpump wrote: »

But I thought The Crisis had been cancelled after the rate cut ??? :cool: In reality Rates could be zero & it will make little differance, The Economy simply has to collapse to a sustainable level & we are a long way from that !! As i reported 10 days ago, consumers are turning to plastic as a last resort, once thats gone, all bets are off !!... & as I have stated many times 2009 is going to be bloodbath, be prepared ..

http://forums.moneysavingexpert.com/showthread.html?t=1253111

Absolutely luvvy, you speak the truth my faithfull Indian companion! As I said in a post the other day, I think that a lot of people are going to max out their cc's to have a 'last good Christmas' and declare bankruptcy in the new year.

I saw that the mobile phone companies have done ok in the share drops. The mobile is going to be the last thing to go for many people. But, when the chop comes and the jobs have gone the dole will not stretch to the payments and the unemployed person is simply going to stop paying this as well as everything else that is not subsistance!

There was a prog about the credit crunch last week - there was a chap on there who had run up his cc's - mewed - run them up again and owed about £300,000. Just declared bankruptcy - still he had the memories of his amazing holidays and all of the other ways he had spent the cash.

£300,000 - all gone and never to be repaid! Tip of the iceberg stuff!