Fitch Places HSBC Private Label CCMNT (USA) I,

2002-1 & 2002-2 on Watch Positive

NEW YORK -- Fitch Ratings has placed four tranches of subordinate notes out of the HSBC Private Label Credit Card Master Note Trust I on Rating Watch Positive. The Rating Watch Positive designation affects approximately $983.95 million of credit card backed securities. The notes are backed by a pool of private label revolving credit card accounts originated by HSBC Bank Nevada, National Association, (formerly Household Bank (SB), N.A.).

The Rating Watch Positive designation results from the accumulation of cash in the principal funding account (PFA); as the PFA funds, a percentage of the bonds are backed by cash rather than receivables, which effectively reduces the exposure of the bonds to credit risk from charged-off receivables. The 2002-1 bonds were structured with a 12-month accumulation period and began funding the PFA in April 2006. As of Jan. 16, 2007, the PFA balance is $403.9 million. There is a reserve account of 0.5% set up to mitigate the risk of negative carry during the accumulation period. The expected maturity for the 2002-1 series is March 15, 2007.
The 2002-2 bonds were structured similarly to the 2002-1 bonds, with a 12-month accumulation period and a reserve account of 0.5% set up to mitigate the risk of negative carry during the accumulation period. Series 2002-2 began funding the PFA in April 2006. As of Jan. 16, 2007, the PFA balance is $416.1 million. The expected maturity for the 2002-2 series is March 15, 2007.

Fitch will continue to closely monitor these transactions.

Credit enhancement for the 'AAA' rated class A notes is provided through subordination of classes B and C, and the excess collateral amount, totaling 22% for series 2002-1 and 24.5% for series 2002-2. The 'A' rated class B notes draw on the 11.5% subordination of class C and the excess collateral amount for series 2002-1, and the 13.5% subordination of class C and the excess collateral amount for series 2002-2. The 'BBB' rated class C notes receive credit enhancement from 5.5% of excess collateral for series 2002-1, and 5.75% of excess collateral for series 2002-1.
The ratings address the likelihood of investors receiving full and timely interest payments in accordance with the terms of the underlying documents and full repayment of principal by the legal final termination dates. They do not address the likelihood of principal repayment by the expected note payment dates.
Rating Actions:
HSBC Private Label Credit Card Master Note Trust I,

fixed-rate asset backed securities, series 2002-1:

--$400,000,000 class A notes affirmed at 'AAA';
--$53,850,000 class B notes 'A'; placed on Rating Watch Positive;
--$30,775,000 class C notes 'BBB'; placed on Rating Watch Positive.
HSBC Private Label Credit Card Master Note Trust I, floating-rate asset backed securities, series 2002-2:
--$400,000,000 class A notes affirmed at 'AAA';
--$58,275,000 class B notes 'A'; placed on Rating Watch Positive;
--$41,050,000 class C notes 'BBB'; placed on Rating Watch Positive.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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