MOODY'S DOWNGRADES FIRST INTERNATIONAL BANK SMALL BUSINESS LOAN DEALS
$65 Million of Asset-Backed Securities Affected.
New York, March 29, 2005 -- Moody's Investors Service downgrades 10 classes of notes issued in six
small business loan securitizations originally sponsored by First International
Bank (FIB) and confirms eight classes at their current rating.
The notes were placed on review for downgrade on October 28, 2004
and the current action concludes the review of the notes. The downgrades
are due to lower-than-expected recovery rates that are being
realized on defaulted loans since the last rating action taken on the
securities. The complete ratings actions are as follows:
RATING ACTIONS
Issuer: First National Bank of New England SBA Loan-Backed
Trust 1998-1
$3.56 million Class A Notes, downgraded to Baa2 from
A2
$0.40 million Class B Notes, downgraded to B2 from
Ba2
Issuer: First International Bank Trust 1999-1
$9.43 million Class A Notes, downgraded to Baa2 from
A3
$0.84 million Class M Notes, rating confirmed at B2
$0.21 million Class B Notes, rating confirmed at B3
Issuer: First International Bank Trust 2000-1
$12.23 million Class A Notes, downgraded to B2 from
Ba2
$1.84 million Class M Notes, downgraded to Ca from
Caa2
Issuer: First International Bank Trust 2000-2
$10.66 million Class A Notes, rating confirmed at
Baa1
$0.92 million Class M Notes, rating confirmed at Ba2
Issuer: FNBNE Business Loan Trust 1998-A
$7.70 million Class A Notes, rating downgraded to
A2 from Aa3
$0.45 million Class M-1 Notes, rating confirmed
at Baa2
$0.45 million Class M-2 Notes, rating confirmed
at Ba1
Issuer: FIB Business Loan Trust 1999-A
$10.57 million Class A Notes, rating downgraded to
A2 from A1
$0.49 million Class M-1 Notes, rating confirmed
at Baa2
$0.49 million Class M-2 Notes, rating confirmed
at Ba3
Issuer: FIB Business Loan Trust 2000-A
$16.0 million Class A Notes, rating downgraded to
B2 from Ba2
$1.34 million Class M-1 Notes, rating downgraded
to Ca from Caa2
$1.48 million Class M-2 Notes, rating downgraded
to C from Caa3
FIB's pools have been adversely impacted by the recession in the
manufacturing sector which began in the fourth quarter of 2000.
Most affected are the 2000-1 and 2000-A transactions,
which have delinquencies over 60 days of 24% and 18%,
respectively as of the February 2005 distribution date. The Class
A securities in both transactions are downgraded to B2, based on
the remaining excess spread available. Recoveries on defaulted
collateral have been lower than expected in both deals at 31% and
27% for the 2000-1 and 2000-A transactions,
respectively. Collateral generally consists of a mix of equipment
and real estate.
The remaining five securitizations are performing better than the 2000-1
and 2000-A deals, but are performing worse than expected
at the time of the original ratings. For the SBA 7(a) deals,
60+ delinquencies are as follows: 1998-1: 17%;
1999-1: 22%; 2000-2: 12%.
Delinquencies past 60 days in the conventional loan deals (1998-A
and 1999-A) are both approximately 10%. Most troublesome
for some of the deals is the lower than expected recovery rates on defaulted
collateral, ranging from 18% for 1999-A to 42%
for 1999-1. The ratings actions consider the impact of lower
and more volatile recoveries on the collateral, in addition to the
credit support available in the form of subordination, reserve account,
and excess spread.
Securities issued in the 2000-2 deal and subordinate securities
in the 1999-1, 1998-A, and 1999-A transactions
are confirmed at their current ratings based on performance consistent
with assumptions made in the previous downgrade of the securities on March
1, 2004.
UPS Capital Corporation, a wholly-owned subsidiary of United
Parcel Service, Inc., purchased FIB in August 2001.
In April 2003, FIB changed its name to UPS Capital Business Credit
(UPSBC). UPSBC is currently servicing the portfolio. FIB
was formerly known as First National Bank of New England.
The notes were sold in a privately negotiated transaction without registration
under the Securities Act of 1933 (the Act) under circumstances reasonably
designed to preclude a distribution thereof in violation of the Act.
The issuance has been designed to permit resale under Rule 144A.
Further information is available on http://www.moodys.com
New York
Milton Chacon
Managing Director
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Kent G. Becker
Senior Vice President
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653