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Rating Action:

MOODY'S PLACES 23 CLASSES OF SECURITIES ISSUED BY PROVIDIAN'S CREDIT CARD TRUSTS UNDER REVIEW FOR POSSIBLE UPGRADE

21 Jun 2005
MOODY'S PLACES 23 CLASSES OF SECURITIES ISSUED BY PROVIDIAN'S CREDIT CARD TRUSTS UNDER REVIEW FOR POSSIBLE UPGRADE

Approximately $1.6 Billion of Asset-Backed Securities Affected.

New York, June 21, 2005 -- Moody's Investors Service has placed the ratings on twenty-three classes of credit card receivables-backed securities issued from the Providian Gateway Master Trust (the Trust) and the related Providian owner trusts under review for possible upgrade.

Moody's said that this rating action follows the June 6, 2005 announcement by Washington Mutual, Inc. (Washington Mutual) that it had entered into a definitive agreement to acquire Providian Financial Corporation (Providian). On the same day, Moody's affirmed the ratings and stable outlook of Washington Mutual, Inc. (Senior Debt at A3) and its thrift subsidiaries (Deposits at A2). The rating agency also put the ratings of Providian National Bank (Deposits at Ba2, Issuer Strength at Ba3, and Bank Financial Strength at D) under review for possible upgrade. The ratings of Providian (Senior Debt at B2) were placed under review in January, and remain under review for upgrade.

Moody's review of Providian's receivables-backed securities will focus primarily on the financial strength of the seller/servicer as well as the integration of Providian's credit card business with Washington Mutual's mortgage-based business model.

Upon acquisition, it is expected that Providian National Bank will merge with one of Washington Mutual's thrift subsidiaries, Washington Mutual Bank, FSA. Washington Mutual Bank will be the surviving entity and assume the role of seller/servicer for the related asset-backed programs. The current rating of Washington Mutual Bank is considerably stronger than that of Providian National Bank. The credit strength of the seller/servicer is an important consideration in Moody's credit opinion of the related asset-backed securities due to the correlation between the viability of the revolving securitization program and that of the related seller/servicer. It is Moody's opinion that higher-rated seller/servicers are more likely to maintain the ongoing servicing and origination requirements of such a program.

Furthermore, the relatively strong credit profile of Washington Mutual Bank will provide the credit card business with access to broader and cheaper sources of financing, which may allow Providian to compete more effectively in the middle and prime segments of the credit card market. Over the past three years, current Providian management have successfully grown the middle-market segment of their business and may benefit further from cross-sale opportunities with Washington Mutual's customer base. However, Providian has had more difficulty in expanding the much more price-sensitive prime segment of their card business. Competition in the prime segment of the market is formidable and includes issuers with much greater scale and/or financial resources than the pro forma combined Providian and Washington Mutual entity; therefore, Moody's believes the company's forays in to the prime card market will continue to be a challenge.

The ratings review will conclude after all the necessary approvals for the acquisition have been received, at which point Moody's expects Providian's ratings will be raised to the level of Washington Mutual's for similar instruments.

The complete rating action is as follows:

UNDER REVIEW FOR POSSIBLE UPGRADE

Issuer: Providian Gateway Master Trust

$29,605,000 Class B Certificate, Series 2002-B, rated Baa3

$118,422,000 Class C Certificate, Series 2002-B, rated Ba3

$63,694,000 Class B Certificate, Series 2003-A, rated Ba3

Issuer: Providian Gateway Owner Trust

$73,200,000 Class B Certificate, Series 2004-A, rated Aa2

$112,020,000 Class C Certificate, Series 2004-A, rated A2

$84,630,000 Class D Certificate, Series 2004-A, rated Baa2

$100,605,000 Class E Certificate, Series 2004-A, rated Ba3

$68,200,000 Class B Certificate, Series 2004-B, rated Aa2

$96,300,000 Class C Certificate, Series 2004-B, rated A2

$80,250,000 Class D Certificate, Series 2004-B, rated Baa2

$72,220,000 Class E Certificate, Series 2004-B, rated Ba3

$50,600,000 Class B Certificate, Series 2004-D, rated Aa2

$89,500,000 Class C Certificate, Series 2004-D, rated A2

$70,100,000 Class D Certificate, Series 2004-D, rated Baa2

$68,113,000 Class E Certificate, Series 2004-D, rated Ba3

$49,383,000 Class B Certificate, Series 2004-E, rated Aa2

$61,728,000 Class C Certificate, Series 2004-E, rated A2

$61,728,000 Class D Certificate, Series 2004-E, rated Baa2

$64,814,800 Class E Certificate, Series 2004-E, rated Ba2

$27,410,000 Class B Certificate, Series 2004-F, rated Aa2

$48,494,000 Class C Certificate, Series 2004-F, rated A2

$37,951,000 Class D Certificate, Series 2004-F, rated Baa2

$35,843,500 Class E Certificate, Series 2004-F, rated Ba2

COLLATERAL PERFORMANCE

The performance of the securitized Providian credit card portfolio remains within the bounds of Moody's expectations and is not a principal factor in the ratings review. The long-term average yield, charge-off rate and payment rate have remained above the industry average as measured by Moody's Credit Card Index.

BACKGROUND

Providian Financial Corporation, headquartered in San Francisco, California, is the ninth largest credit card issuer in the U.S. with managed credit card receivables of $18.4 billion at May 31, 2005. Providian National Bank, the originator and servicer of the Providian credit card receivables, is a San Francisco based, FDIC-insured bank and a direct subsidiary of Providian Financial Corp. Providian National Bank has a long-term deposit rating of Ba2, and a bank financial strength rating of C, all of which are under review for possible upgrade.

Washington Mutual, Inc., headquartered in Seattle, Washington, is the largest thrift holding company in the U.S. and sixth largest among U.S. bank and thrift companies, with assets of $320 billion at September.

New York
Jay Eisbruck
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Jinhua (Rachel) Sun
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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