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Rating Action:

MOODY'S INVESTORS SERVICE ASSIGNS (P)Baa3 RATING TO OAKMONT ASSET TRUST'S PROPOSED SR. UNSECURED NOTES DUE 2008. AFFIRMS Baa3 RATING OF WASTE MANAGEMENT, INC.

15 Dec 2003
MOODY'S INVESTORS SERVICE ASSIGNS (P)Baa3 RATING TO OAKMONT ASSET TRUST'S PROPOSED SR. UNSECURED NOTES DUE 2008. AFFIRMS Baa3 RATING OF WASTE MANAGEMENT, INC.

Approximately $350 million of Oakmont debt rated.

New York, December 15, 2003 -- Moody's Investors Service assigned a (P)Baa3 rating to the proposed issuance by Oakmont Asset Trust ("Oakmont" or the "Issuer") of $350 million senior unsecured notes due 2008 (the "Oakmont Notes"). This is the first time Moody's has rated the debt of Oakmont. The outlook is stable.

At the same time, Moody's affirmed the Baa3 senior unsecured debt ratings of Waste Management, Inc. ("WM"). WM, together with its wholly-owned subsidiary, Waste Management Holdings, Inc. (WM Holdings"), will jointly guarantee WM's contingent obligations (as described below) under the Reimbursement Agreement and the performance of Oakmont under a related swap agreement; will pay a commitment fee to Oakmont under the Credit-Linked Letter of Credit Facility that when combined with Oakmont's other cash flows will fund interest payments on the Oakmont Notes; and will have certain contingent liabilities with respect to fees and indemnifications of various service providers to the transaction. Consequently, Moody's considers WM's leverage capacity to have been reduced by up to $350 million via its commitment fee and contingent obligations under the Reimbursement Agreement as well as the guarantee of Oakmont's obligations under the interest rate swap agreements.

The Issuer will loan the proceeds of the Oakmont Notes to Fleet National Bank ("Fleet") who will issue a 5-year unsecured term note to Oakmont (the "Fleet Note"). Fleet will then have a first priority lien on the Fleet Note to secure the obligations of Oakmont under an irrevocable Master Letter of Credit. This agreement, among Oakmont and Fleet, provides reimbursement for designated letters of credit that have been issued for the benefit of WM and/or its subsidiaries/affiliates. Under the agreement, Fleet is entitled to reduce amounts owing under the Fleet Note to the extent any amounts that Fleet has advanced under the designated letters of credit issued fail to be timely reimbursed by WM.

The rating addresses the credit risks associated with the payment of interest and principal on the Oakmont Notes in light of certain support agreements described below as well as from the corporate credit risk related to the Fleet Notes.

The Baa3 rating reflects the credit support given to the Oakmont Notes via the execution by WM and WM Holdings of the Reimbursement Agreement and a swap guarantee ("Guarantee Agreement"), which provide for reliance on the corporate risk of WM for repayment of principal and interest under certain circumstances. The Oakmont Notes do not have direct recourse to WM. The rating also benefits from the low likelihood of a default under the Fleet Notes, which are the obligation of Fleet, whose ultimate parent is FleetBoston Financial (bank deposit rating at Aa3 and holding company senior debt at A1).

Oakmont Notes will be the obligations of Oakmont, a special purpose Delaware statutory trust, and are to be repaid solely from the income and any proceeds from the assets of the Issuer. Oakmont's primary asset is a reducible 5-year unsecured term note from Fleet, which such reductions are supported by a make-whole Reimbursement Agreement from WM only in the event of its non-performance under a WM letter of credit. No credit support from Fleet is incorporated in the rating as the Fleet Note is reducible due to non-performance by WM. Under the Guarantee Agreement, WM provides counterparty credit support for Oakmont by guarantying the its obligations under the Interest Rate Swap Agreements.

The Reimbursement Agreement between WM, WM Holdings and Oakmont limits the creation of liens on WM assets to 15% of consolidated net tangible assets of WM. The agreement also contains a cross-default provision should WM default on any obligation greater than $50 million. Under certain events of default, Oakmont may not increase the amounts drawable under the Master Letter of Credit by designating the termination of outstanding designated letters of credit as they come up for renewal under the facility, preventing the designation of new letters of credit and demanding the deposit of cash collateral equal to its current reimbursement obligations as well as contingent reimbursement obligations from designated letters of credit still outstanding.

Oakmont's assets will include the Fleet Note, the Reimbursement Agreement and rights under the proposed Interest Rate Swap Agreements. Payment on the Oakmont Notes is expected to be funded by the Issuer with the payments received from Fleet under the Fleet Note, from WM under the Reimbursement Agreement and from the swap receipts deposited under the Interest Rate Swap Agreements.

In the event that WM fails to reimburse Fleet for payments made on certain designated letters of credit issued for the benefit of WM and/or its subsidiaries/affiliates, Fleet may demand payment under the Master Letter of Credit, and, to effect payment, Fleet will be entitled to set-off against the Fleet Note, thus reducing the principal (and interest in certain circumstances) owed under the Fleet Note.

It is anticipated that the Issuer will enter into two or more interest rate swaps with certain counterparties (which will have a minimum senior unsecured debt rating of "A2") to convert floating interest cash flows received on the Fleet Note and/or under the Reimbursement Agreement to fixed interest cash flows that, when combined with the commitment fee from WM, are consistent with the accrual of interest on the proposed Oakmont Notes. Under the Reimbursement Agreement, WM will be obligated to reimburse to Oakmont any payments made by the Issuer to Fleet under the Master Letter of Credit. WM's wholly-owned subsidiary, WM Holdings, will guarantee such obligations as well as the Issuer's obligations to swap counterparties.

Waste Management, Inc., headquartered in Houston, TX, is a leader in providing environmental waste management services. The company reported revenues of $2.97 billion for the nine months ended September 30, 2003.

Fleet National Bank has as its ultimate parent FleetBoston Financial. Headquartered in Boston, MA,. FleetBoston had assets of $196 billion at September 30, 2003.

New York
Patrick Finnegan
Managing Director
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Catherine Guinee
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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