Goldman Sachs Group Inc. paid off at face value some junior-ranking slices of two collateralized debt obligations at the potential expense of more-senior classes that now are likely to default.

The moves are unusual in that the senior-most creditors are typically the first in line to get paid. But Fitch Inc. said last week that Goldman had applied its "sole discretion" to ignore the standard payment priority and use cash in reserve accounts for the Abacus 2006-13 and Abacus 2006-17 CDOs to retire lower-ranked notes.

It is unclear why Goldman did this. Michael Duvally, a spokesman for the investment bank, would not discuss the matter.

Motivations for such action could include ownership of the junior notes or separate bets against higher classes, according to Howard Hill, a former Babson Capital Management LLC portfolio manager.

"You just don't know without seeing who owns all the positions related to the deal," said Hill, who now runs a blog from New Milford, Conn.

Fitch analyst Karen Trebach said the use of reserve funds may help cause, or add to, losses for holders of the CDOs' remaining classes.

"We are not aware of the use of this feature in other transactions we rate," Trebach said.

Goldman packaged $1.4 billion of credit-default swaps into the CDOs when they were created in September 2006 and December 2006, Fitch said. The derivatives were intended to pay off a Goldman Sachs unit if commercial-mortgage bonds defaulted.

Fitch downgraded the classes of Abacus 2006-13 that were not redeemed to CCC, or seven steps below investment grade. Classes of Abacus 2006-17 that were not paid down were lowered an additional step to CC. Some of the debt in each portion was originally rated triple-A.

The repaid classes had face values of $66 million and the rest totaled $553 million.

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