MOODY'S ASSIGNS A PRIME-1 RATING TO HUDSON CASTLE'S FOXBORO FUNDING LTD. and FOXBORO FUNDING LLC EXTENDIBLE ABCP PROGRAM
New York, March 07, 2003 -- Moody's Investors Service has assigned a Prime-1 rating to Foxboro Funding Ltd, and to Foxboro Funding, LLC's (collectively Foxboro Funding) US Dollar denominated Secured Liquidity Notes program. Secured Liquidity Notes (SLNs) are a form of extendible ABCP.
Foxboro Funding Ltd is a Jersey registered, bankruptcy remote corporation owned by Foxboro Capital Ltd. Its co-issuer, Foxboro Funding LLC, is a bankruptcy remote Delaware based LLC entity with Foxboro Capital Ltd as its sole member. Foxboro Funding LLC will issue fully supported US Dollar denominated Prime-1 rated SLNs with an expected maturity of up to 90 days and a legal final maturity of 390 days. Foxboro Funding Ltd. is expected to issue similar SLNs in the Euro market. The proceeds of the SLNs will be used to purchase inter-company funding notes issued by Foxboro Capital Ltd., (Foxboro Capital) a Jersey registered, bankruptcy remote, multi-seller and multi-debt issuing entity sponsored by Hudson Castle Group Inc. Foxboro Capital, which itself is unrated, will in turn use the proceeds from these inter-company funding notes to make loans secured by interests in eligible assets originated by corporations as is typical of a multi-seller ABCP conduit. Foxboro Capital will obtain both fully supported liquidity facilities from Prime-1 rated financial institutions and swaps as needed to refund the SLNs issued by Foxboro Funding.
Foxboro Funding has an initial authorized amount of $1 billion dollars. Moody's will review each asset purchase entered into by Foxboro Capital.
RATING OPINION: The Prime-1 rating assigned to Foxboro Funding's SLNs is based on, among other factors, the following:
§ Full liquidity support provided by Prime-1 rated entities in a dollar amount necessary to redeem the SLNs in full at legal final maturity.
§ Moody's prior review of each transaction entered into by Foxboro Capital to ensure the risks to investors inherent in each transaction is commensurate with a Prime-1 rating.
§ Structural protections against the bankruptcy of both Foxboro Capital and Foxboro Funding.
§ Moody's assessment of the ability of Deutsche Bank Trust Company Americas to administer the SLN and Euro SLN program.
There is no program level credit enhancement for Foxboro Funding since it is a fully supported program.
Liquidity is provided through a combination of a funding obligation from Prime-1 rated entities for the principal amount of the SLNs and a cost of funds swap for the interest component of the SLNs. For this program, the availability of the liquidity does not depend on the value or the condition of the assets held by Foxboro Capital, but rather will be equal to the face amount of outstanding SLNs. However, the availability of liquidity is conditioned upon the absence of bankruptcy of Foxboro Capital.
PARTIES TO THE TRANSACTION
Hudson Castle Group Inc. acts as referral agent for Foxboro Funding, and provides some administrative services as well. Deutsche Bank Trust Company Americas (A1/Prime-1/C) acts as the Administrative Agent for Foxboro Funding. Deutsche Bank Trust Company Americas has significant prior experience in handling administrative responsibilities in several other conduits including Prime-1 rated Aries One Metafolio Corporation, and Fenway Funding LLC. Both are other ABCP programs sponsored by Hudson Castle Group.
FIRST ASSET PURCHASE
Contemporaneously with executing closing documents for Foxboro Funding, Foxboro Funding also completed its first asset purchase, a $1 billion transaction backed by loan and participation interests originated by an A2/P-1 rated US based non bank broker dealer. Liquidity to fully support this transaction is provided through a combination of a funding obligation for the principal amount of the SLNs and a cost of funds swap for the interest component of the SLNs both provided by Lehman Brothers Holdings Inc (rated A2/P-1). Foxboro Funding is authorized to issue up to $1.0 billion of SLNs.
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