Fitch Rates Discover Card Master Trust I Class A/B Series 2006-3 'AAA/A+'.
--$500 million floating rate class A certificates 'AAA';
--$26.316 million floating rate class B certificates '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 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.
Classes A and B certificate holders will receive monthly interest payments of one-month London Interbank Offered Rate (LIBOR) plus three and 14 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 Nov. 15, 2006. Following a variable accumulation period, principal is expected to be paid to class A certificate holders on the September 2011 distribution date and to class B certificate holders one month later. The series termination occurs on the March 2014 distribution date. As a part of Group One, series 2006-3 will share excess finance charges and principal collections with other Group One series.
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|Date:||Oct 3, 2006|
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