medium · Asset-Backed Securities asset-nuances
An analyst is comparing two credit card master trusts. Trust X has an MPR of 22.00% and Trust Y has an MPR of 12.00%.
If both trusts trigger rapid amortization simultaneously, which statement best describes the investor experience?
- Investors in Trust X will receive their principal back significantly faster than those in Trust Y.
- Investors in Trust Y have more protection because lower MPR implies more stable finance charge generation.
- Trust X will likely breach its excess spread trigger later than Trust Y because of higher payment velocity.
- Both trusts will pay down over exactly 12 months as per the controlled amortization schedule.
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