medium · Asset-Backed Securities
Major Bank Credit Card Master Trust Series 2026-1 has a portfolio yield of 17.50%, a servicing fee of 2.00%, and a weighted average bond coupon of 5.50%.
If the annualized charge-off rate spikes from 4.50% to 11.00%, what is the new excess spread, and what is the typical structural consequence if the three-month rolling average falls below 0%?
- Excess spread is -1.00%; the seller is required to add more receivables immediately.
- Excess spread is 1.00%; the series continues its revolving period.
- Excess spread is 10.00%; the excess cash flows to the residual holder.
- Excess spread is -1.00%; the series enters rapid amortization.
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