MOODY'S DOWNGRADES FUJI BANK SUPPORTED CP PROGRAMS TO PRIME-2
New York, 02-25-98 -- Moody's Investors Service downgraded to Prime-2 the ratings of three asset-backed commercial paper (ABCP) programs and seven structured commercial paper programs supported by direct pay irrevocable letters of credit from Fuji Bank, Ltd. (Fuji). Joan Flanigan-Clarke, an assistant vice president in Moody's structured finance group, says the downgrade follows Moody's February 24 announcement that it has downgraded Fuji's short-term rating to Prime-2. Moody's had placed the Prime-1 ratings under review for possible downgrade in November 1997 following the placement under review for possible downgrade of Fuji's short-term rating.
RATINGS AFFECTED BY THE DOWNGRADE: The three ABCP programs (see list below) are fully supported by Fuji Bank, Ltd. The other programs are negatively affected because they are fully supported by Fuji Bank, Ltd. letters of credit.
The ratings for the following programs are affected:
ABCP PROGRAMS (all rated Prime-2)
Progress Funding Corporation, Series A Notes only
Dynamic Funding Corporation
Apex Finance Limited
LETTER OF CREDIT-BACKED TRANSACTIONS SUPPORTED BY FUJI BANK, LTD. (all rated Prime-2)
Epson America Inc., Series A
Fuji Capital Markets Corp.
Kubota Finance (USA) INC.
Okura & Co. (America) Inc.
Seiko Corporation of America
Yamaha Motor Finance Corp.
PROGRESS FUNDING'S SERIES B NOTES RATING CONFIRMED: The Prime-1 rating assigned to Progress Funding's Series B Notes is confirmed because Prime-1-rated Norinchukin Bank has provided a confirmation of Fuji's liquidity commitment, and there are certain structural protections that provide further protection to the Series B noteholders.
More specifically, Series B Notes benefit from an irrevocable confirmation of Fuji's liquidity commitment, which remains available even if Fuji were to become insolvent. Further, because (1) Progress ceases to issue ABCP if Fuji's rating falls below Prime-2, and (2) issuance of ABCP is limited to a maximum maturity of three months, Moody's has concluded that Series B Notes are sufficiently protected to warrant maintaining their Prime-1 rating.
The Norinchukin Bank is rated A1 for long-term deposits and Prime-1 for its short-term deposits. Its bank financial strength rating is D+.
ADVANTAGE ASSET FUNDING RATING ALSO CONFIRMED: The Prime-1 rating assigned to Advantage Asset Funding Corporation, a partially supported, multiseller ABCP program administered by Fuji Bank and Trust, is also confirmed because liquidity and program credit enhancement for the program are provided by either cash collateral accounts or liquidity commitments from other Prime-1-rated banks, not by commitments from Fuji Bank, Ltd. The funds in the cash accounts are invested only in Prime-1-rated investments.
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