Fitch Rates Discover Card Master Trust I Class A/B Series 2006-2 'AAA'/'A+.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Discover Card Master Trust I series 2006-2 subseries are rated by Fitch fitch: see polecat. as follows: Subseries 1 --$600.00 million floating-rate class A 'AAA'; --$31.579 million floating-rate class B 'A+'. Subseries 2 --$600.00 million floating-rate class A 'AAA'; --$31.579 million floating-rate class B 'A+' . Subseries 3 --$320.00 million floating-rate class A 'AAA'; --$16.843 million floating-rate class B 'A+' . The ratings reflect the high quality of the receivables generated by Discover Card holders, 12.5% available subordinated amount supporting class A, 7.5% cash collateral account protecting class B, the transaction's sound legal and cash flow structures, and strong servicing capabilities provided by Discover Bank. Economic and credit stress scenarios were applied to the collateral pool to determine the appropriate levels of credit enhancement Credit Enhancement A method whereby a company attempts to improve its debt or credit worthiness. Notes: Credit enhancements take many different forms. An example of a credit enhancement would be conversion rights added on to a debt instrument in order to lower the issuing for the certificates. Additionally, investors are protected from a deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in asset quality, seller insolvency insolvency Condition in which liabilities exceed assets so that creditors cannot be paid. It is a financial condition that often precedes bankruptcy. In the context of equity, insolvency is the inability to pay debts as they become due; insolvency under the balance-sheet or servicer default by early amortization triggers. If certain adverse events occur, an accelerated payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. of investor principal will begin possibly earlier than expected. During such an amortization event, finance charge collections normally allocated to the seller will become available to cover trust expenses through a structural feature that fixes the finance charge allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as based upon pre-amortization invested amounts. Allocating finance charge collections in this manner allows funds otherwise designated to the seller to flow through to the trust. Discover Bank has the option to allocate collections on a floating basis, which would require enhancement levels to be increased to 17.5% for class A and 12.5% for class B. Subseries 1 class A and B certificateholders will receive monthly interest payments of one-month London Interbank Offered Rate London Interbank Offered Rate A short-term interest rate often quoted as a 1,3,6-month rate for U.S.dollars. (LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). ) plus 0 and 12 basis points, respectively, throughout the revolving and accumulation periods Accumulation Period 1. The phase in an investor's life when he/she builds up his/her savings and the value of his/her investment portfolio with the intention of having a nest egg for retirement. 2. and on the expected final payment date, provided an early amortization event does not occur. Interest will be paid on the 15th of each month, beginning August 15, 2006. Following a variable accumulation period, principal is expected to be paid to class A certificateholders on the July 2009 distribution date and to class B certificateholders one month later. The series termination occurs on the January 2012 distribution date. As a part of Group One, subseries 1 will share excess finance charge and principal collections with other Group One series. Subseries 2 class A and B certificateholders will receive monthly interest payments of one-month LIBOR plus 3 and 16 basis points, respectively, throughout the revolving and accumulation periods and on the expected final payment date, provided an early amortization event does not occur. Interest will be paid on the 15th of each month, beginning August 15, 2006. Following a variable accumulation period, principal is expected to be paid to class A certificateholders on the July 2011 distribution date and to class B certificateholders one month later. The series termination occurs on the January 2014 distribution date. As a part of Group One, subseries 2 will share excess finance charge and principal collections with other Group One series. Subseries 3 class A and B certificateholders will receive monthly interest payments of one-month LIBOR plus 8 and 26 basis points, respectively, throughout the revolving and accumulation periods and on the expected final payment date, provided an early amortization event does not occur. Interest will be paid on the 15th of each month, beginning August 15, 2006. Following a variable accumulation period, principal is expected to be paid to class A certificateholders on the July 2013 distribution date and to class B certificateholders one month later. The series termination occurs on the January 2016 distribution date. As a part of Group One, subseries 3 will share excess finance charge and principal collections with other Group One series. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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