MOODY'S UPGRADES 23 CLASSES OF SECURITIES ISSUED BY PROVIDIAN'S CREDIT CARD TRUSTS
Approximately $1.6 Billion of Asset-Backed Securities Affected.
New York, October 21, 2005 -- Moody's Investors Service upgraded the ratings on twenty-three
classes of credit card receivables-backed securities issued from
the Providian Gateway Master Trust and the related Providian owner trusts
(collectively, "Gateway Trusts"). These securities
were placed under review for possible upgrade on June 21, 2005.
The upgrade concludes a review of the outstanding certificates and notes
of the Gateway Trusts. The subordinate notes issued from the newly-created
Providian Master Note Trust ("Note Trust") remain under review
for possible upgrade due to a structural feature described below.
This rating action follows the September 30, 2005 upgrade of the
ratings of Providian Financial Corporation (Senior unsecured debt rating
from B2 to A3) and its subsidiary Providian National Bank (Deposit rating
from Ba2 to A2/P-1), which was taken in anticipation of the
acquisition of Providian by Washington Mutual, Inc. on October
1. As a part of the transaction, Providian National Bank
was merged with and into Washington Mutual Bank, with all obligations
of Providian National Bank being assumed by Washington Mutual Bank.
As the surviving entity, Washington Mutual Bank assumed all obligations
of Providian National Bank, including the role of seller/servicer
for the related asset-backed programs.
RATIONALE
The credit strength of the newly-merged Washington Mutual Bank
is considerably stronger than was Providian National Bank's (Long
term deposit rating Ba2 prior to the acquisition and merger). 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, Providian management has 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 into the much more price-sensitive prime segment of
the credit card business. Competition in the prime segment of the
market is considerable and includes issuers with much greater scale and/or
financial resources than the pro forma combined Providian and Washington
Mutual entity.
NOTE TRUST SUB-BONDS REMAIN ON REVIEW
The subordinate notes issued from the newly-created Note Trust
remain under review for possible upgrade. A structural feature
of the Note Trust allows the required credit enhancement levels to be
retroactively reduced so long as such reduction would not result in a
downgrade of the current ratings, among other things. It
is expected that Providian will utilize this option by year end,
at which time Moody's will conclude its review of the related bonds.
THE COMPLETE RATING ACTION IS AS FOLLOWS:
Issuer: Providian Gateway Master Trust
$29,605,000 Class B Certificate, Series 2002-B,
upgraded to Aa3 from Baa3
$118,422,000 Class C Certificate, Series 2002-B,
upgraded to Baa3 from Ba3
$63,694,000 Class B Certificate, Series 2003-A,
upgraded to Baa2 from Ba3
Issuer: Providian Gateway Owner Trust
$73,200,000 Class B Notes, Series 2004-A,
upgraded to Aaa from Aa2
$112,020,000 Class C Notes, Series 2004-A,
upgraded to Aa1 from A2
$84,630,000 Class D Notes, Series 2004-A,
upgraded to A2 from Baa2
$100,605,000 Class E Notes, Series 2004-A,
upgraded to Ba1 from Ba3
$68,200,000 Class B Notes, Series 2004-B,
upgraded to Aaa from Aa2
$96,300,000 Class C Notes, Series 2004-B,
upgraded to Aa1 from A2
$80,250,000 Class D Notes, Series 2004-B,
upgraded to A1 from Baa2
$72,220,000 Class E Notes, Series 2004-B,
upgraded to Baa3 from Ba3
$50,600,000 Class B Notes, Series 2004-D,
upgraded to Aaa from Aa2
$89,500,000 Class C Notes, Series 2004-D,
upgraded to Aa1 from A2
$70,100,000 Class D Notes, Series 2004-D,
upgraded to A2 from Baa2
$68,113,000 Class E Notes, Series 2004-D,
upgraded to Ba1 from Ba3
$49,383,000 Class B Notes, Series 2004-E,
upgraded to Aaa from Aa2
$61,728,000 Class C Notes, Series 2004-E,
upgraded to Aa1 from A2
$61,728,000 Class D Notes, Series 2004-E,
upgraded to A1 from Baa2
$64,814,800 Class E Notes, Series 2004-E,
upgraded to Baa3 from Ba2
$27,410,000 Class B Notes, Series 2004-F,
upgraded to Aaa from Aa2
$48,494,000 Class C Notes, Series 2004-F,
upgraded to Aa1 from A2
$37,951,000 Class D Notes, Series 2004-F,
upgraded to A2 from Baa2
$35,843,500 Class E Notes, Series 2004-F,
upgraded to Baa3 from Ba2
The following ratings remain on review for possible upgrade:
Issuer: Providian Master Note Trust
ProvidianSeries notes
$90,400,000 Class 2005-M1 notes, rated
Aa2, under review for possible upgrade
$87,800,000 Class 2005-B1 notes, rated
A2, under review for possible upgrade
$93,100,000 Class 2005-C1 notes, rated
Baa2, under review for possible upgrade
$85,100,000 Class 2005-D1 notes, rated
Ba2, under review for possible upgrade
COLLATERAL PERFORMANCE
The performance of the securitized Providian credit card portfolio remains
within the bounds of Moody's expectations. 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
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 $323.53 billion at June 30, 2005.
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