medium · Asset-Backed Securities asset-nuances
A credit card master trust series has a three-month rolling average excess spread trigger set at 0.00%. The monthly excess spread for the last three months was +1.50%, -0.20%, and -1.90%.
What is the immediate structural consequence?
- The seller must exercise the discount option to reset the yield
- The servicing fee is waived to restore the excess spread to positive
- The series enters rapid amortization, ending the revolving period
- The series continues in the revolving period as the average remains positive
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