MOODY'S AFFIRMS RATINGS OF CRC, CAFCO and CXC ABCP
Moody's Investors Service today affirmed the Prime-1 ratings of the asset-backed commercial paper issued by CXC, LLC ("CXC"), CAFCO, LLC ("CAFCO"), and CRC Funding, LLC (CRC), as well as CXC´s Aaa ratings for medium-term notes ("MTNs"). Each conduit is administered by Citicorp North America, Inc. ("CNAI"). The ratings were affirmed in response to an amended complaint filed by Enron on December 1, 2003, updating an earlier complaint filed on September 24, 2003. Named defendants include CXC, CAFCO, and CRC, along with CNAI, Citibank, N.A., other financial institutions and certain special purpose entities, some of which are Enron-related.
The amended complaint pertains to four transactions secured by Enron-related assets. The original complaint filed in September 2003 involved a potential $49.3 million preferential repayment to CXC on a $727.5 million transaction (see Moody's press release dated October 27, 2003 for further details). The amended complaint further contains allegations as to two $485 million deals funded by CXC that were repaid in full by September 24, 1999 and February 29, 2000. CAFCO and CRC are also named for the first time in reference to a $500 million transaction shared by the two conduits which was repaid in full by November 17, 1999. Since May 3, 1999, November 17, 1999 and November 16, 2001, no Enron-related transactions remained in either CAFCO, CRC or CXC, respectively.
Moody's affirmation of the ratings of each of the three conduits is based on indemnifications and structural protections that insulate investors from all potential monetary damages associated with the complaint. If any claims associated with the amended complaint were to result in monetary damages against CXC, CAFCO or CRC, those amounts would be covered under third-party indemnification provisions of each conduit's administration agreement. Moody's will continue to monitor the progress of Enron's bankruptcy proceedings and the potential impact that pending litigation may have on the credit quality of CXC, CAFCO, and CRC.
Each conduit is a Delaware limited liability company administered by CNAI. CXC is authorized to issue $17.5 billion of debt in the form of ABCP and MTNs. CAFCO and CRC are each authorized to issue $15 billion. At the end of 2003, CXC had $4.8 billion in ABCP outstanding and CAFCO and CRC had $8.9 billion and $8.2 billion in outstanding ABCP, respectively.
CNAI, an indirect wholly owned subsidiary of Citigroup Inc. (Aa1/Prime-1), manages five other ABCP conduits including: APRECO, LLC (Prime-1); CIESCO, LLC (Prime-1 and Aaa for MTNs); CHARTA, LLC (Prime-1); Eureka Securitization Inc. (Prime-1 and Aaa for MTNs) and Corporate Asset Securitization Australia, Ltd. (CASAL) (not rated).
Conduits administered by other entities within Citigroup include Beta Finance Corporation (MTNs rated Aaa); Beta Finance Incorporated (MTNs rated Aaa); CC (USA) Inc. (MTNs rated Aaa), Centauri Corporation (MTNs rated Aaa); Cobblestone Funding, LLC; DAKOTA Note Program, Dorada Corporation (MTNs rated Aaa); Dorada Finance, Inc. (MTNs rated Aaa); Five Finance Inc. (MTNs rated Aaa); Govco Incorporated; and Oasis Asset Management Limited (each ABCP program rated Prime-1).
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