Losses May Undo Credit-Card Deals

Two credit-card securities deals sold by Maryland-based Chevy Chase Savings Bank may have to be retired early because losses on the underlying credit-card receivables have risen.

The deals had default rates high enough in the last three months to set off an early-payoff process, according to market sources and a document from Chemical Bank, the trustee.

While these issues may be retired early, investors are likely to be paid off in full because of significant credit support behind the issues from Credit Suisse.

During the past three months, losses on the credit-card receivables backing both issues ran at more than a 6% annualized rate -- the threshold for the so-called early amortization event.

Once this event occurs, an early payoff of the credit-card securities may take place if 25% of the investors holding the securities indicate in writing that they favor this action, according to the Chemical document.

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