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Rating Action:

MOODY'S UPGRADES 23 CLASSES OF SECURITIES ISSUED BY PROVIDIAN'S CREDIT CARD TRUSTS

21 Oct 2005
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

No Related Data.
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