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Fitch Rates Discover Card Master Trust I Class A/B Series 2006-2 'AAA'/'A+.

NEW YORK -- Discover Card Master Trust I series 2006-2 subseries are rated by Fitch 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 for the certificates. Additionally, investors are protected from a deterioration in asset quality, seller insolvency or servicer default by early amortization triggers. If certain adverse events occur, an accelerated payout 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 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 (LIBOR) plus 0 and 12 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 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 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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Publication:Business Wire
Date:Jul 28, 2006
Words:673
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