A trust for credit card bonds sold by Bank of America Corp. began diverting cash to a reserve account after the cushion that protects the securities from losses fell below a minimum requirement.

The so-called excess spread for Bank of America bonds backed by credit card payments fell to a three-month average of 4.48% in November, below the 4.5% minimum threshold required by the trust, according to documents connected with the bond sales.

Lower portfolio yields, higher chargeoffs, and the rise in the London interbank offered rate in October ate into cash cushions on credit card portfolios in November, according to Merrill Lynch analysts led by Theresa O'Neill in New York.

Libor, the rate banks charge one another for loans, is commonly used to set the interest rate on bonds backed by credit card assets.

An increase in Libor erodes the excess spread, which is the difference between what credit card issuers receive from cardholders and what they pay in interest to bondholders.

"The trapping of cash does not mean a trust cannot cover its expenses," the Merrill analysts wrote in a report issued Wednesday.

"Amounts deposited into a reserve account can be released in subsequent periods," if the cash cushion builds back up to meet the required levels, the analysts wrote.

B of A acquired MBNA Corp., a Wilmington, Del., credit card issuer, nearly three years ago.

The Charlotte company's deal to buy Merrill is expected to close by yearend.

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