MOODY'S RATING ACTIONS FOR THE SEVEN DAY PERIOD ENDED DECEMBER 14, 2000
New York, December 15, 2000 -- THE FOLLOWING ABCP PROGRAMS WERE ASSIGNED PRIME-1 RATINGS BY MOODY'S DURING THE SEVEN DAY PERIOD ENDED DECEMBER 14, 2000:
MOODY'S ASSIGNS PRIME-1 RATING TO HVB'S MAXIMILIAN CAPITAL CORP. ABCP
In Hong Kong, Moody's assigned a Prime-1 rating to the ABCP of Maximilian Capital Corp. (Maximilian). The program is administered by Prime-1-rated Bayerische Hypo-und Vereinsbank AG (HVB), acting through its Singapore branch (HVB-Singapore). HVB-Singapore and HVB Risk Management Products Inc will be acting as administrative agents. Maximilian may issue up to $3 billion of ABCP.
The assets that Maximilian acquires may be either Non-Loan Assets (corporate debts and/or asset-backed securities) or Structured Asset Backed Investments (loans to its subsidiaries for asset purchases by those subsidiaries). The conduit can only buy Non-Loan Assets that are of at least investment-grade credit quality. The Non-Loan Asset portfolio must maintain an average credit quality from A3 down to Baa1. Maximilian may acquire publicly rated corporate debts and asset-backed securities without prior review by Moody's, as long as certain portfolio criteria are satisfied. The subsidiaries will have their own liquidity and credit enhancement arrangements so that the credit quality of the Structured Asset Backed Investments is consistent with the Prime-1rating of the ABCP.
Liquidity support will provide funds to ensure timely repayment of maturing ABCP, and liquidity will provide funds up to the amount of non-defaulted assets. Maximilian's Non-Loan Asset portfolio will benefit from program-level credit enhancement. This credit support will be in the form of a standby letter of credit provided by HVB-Singapore. At a minimum, it will equal 5% of the outstanding balance of the Non-Loan Asset portfolio; however, initially the required amount will be 6.25% of the outstanding balance of Non-Loan Assets. Maximilian must enter into appropriate hedging agreements with counterparties rated Aa3 (or above) to protect investors from any interest rate or currency risk.
For further details, please see Moody's press release dated December 14, 2000.
MOODY'S ASSIGNS PRIME-1 RATING TO DANSKE BANK'S POLONIUS
Moody's has assigned a Prime-1 rating to Polonius, Inc., a newly established, partially supported credit arbitrage ABCP program sponsored by Danske Bank. Polonius will use ABCP proceeds to invest in a portfolio of investment-grade rated securities (rated at least Baa3) subject to a set of predetermined investment guidelines, which specify credit quality and concentration restrictions. Polonius intends to hold assets to maturity. Moody's Prime-1 rating is based primarily on (1) credit quality of the portfolio; (2) limitation on CP tenor to 45 days; (3) Danske Bank's duty to resize the letter of credit on a daily basis; (4) the available credit enhancement; (5) a strong ratings transition strategy that limits the default risk borne by ABCP investors; (6) liquidity support from Prime-1 rated Danske Bank against non-defaulted securities; and (7) hedging agreements with Prime-1 rated Danske Bank which mitigate interest rate and currency risk. Polonius is authorized to issue up to $5 billion of ABCP.
Credit enhancement for Polonius takes the form of a letter of credit provided by Prime-1 rated Danske Bank. The required credit enhancement is the greater of: (i) 5 per cent of the portfolio balance; (ii) the sum of the two largest exposures rated from Aa3 to Baa3; and (iii) USD 20 million, plus 100 per cent of all non-defaulted exposures rated lower than Baa3. Danske Bank must reevaluate the portfolio on a daily basis, and resize the letter of credit as indicated by the formula above.
Credit arbitrage conduits typically take one of two paths to mitigate the risk of holding downgraded securities: Either the securities can be put to liquidity when they reach a certain ratings level, or credit enhancement may be added. Polonius will take the latter route. As long as a security is rated at least Baa3, it is partially enhanced. Once a security is downgraded to below Baa3, it must be fully enhanced. The restriction on ABCP tenor to 45 days is also part of the transition strategy, as it shortens the length of time during which ABCP investors are exposed to default risk.
For further details, please see Moody's press release dated December 13, 2000.
MOODY'S RATES KEY BANK'S PUBLIC SQUARE FUNDING SERIES II ABCP PRIME-1
Moody's has assigned a Prime-1 rating to Public Square Funding LLC's (Public Square) Series II Commercial Paper Program (Series II). Public Square is an existing partially supported, loan-backed ABCP program sponsored by Prime-1 rated Key Bank, N.A. that makes loans to corporate borrowers. Key Bank has expanded the business scope of Public Square to act as a partially supported multi-seller program financing term and trade receivables and other transactions. The loan-backed portion of the program will continue to be financed exclusively by the existing Series I ABCP. The new term and trade receivable transactions will be financed exclusively by the Series II ABCP. Series II's authorized ABCP issuance amount is $2.0 billion, while Series I is authorized to issue up to $2.0 billion.
The two series of ABCP issued by Public Square will be distinct. The Series I will finance the corporate (loan-backed) loan program, and the Series II will finance traditional ABCP conduit assets. The two series will not share credit enhancement or liquidity. Each series will have its own separate collection and payment accounts. However, each series is subordinate to the other only to the extent that if the obligations of one series are entirely paid off, excess funds could be used to pay the other. Otherwise, the credit enhancement and liquidity mechanics as well as other structuring of each Series supports only the Prime-1 rating assigned to each Series. Nevertheless, the rating of each Series could be affected by a change in the rating of the other Series, since they are both debt obligations of the same issuer.
Moody's will review each asset before it is purchased to assess its effect on Series II's Prime-1 rating. It is anticipated that each asset pool in Series II's portfolio will be of high credit quality or be credit enhanced to a level that will support the conduit's Prime-1 rating. Series II program credit enhancement is equal to 5% of each transaction, unless that transaction has a Moody's rating of Aa2 or higher, with no floor amount. Series II program credit enhancement is provided in the form of a letter of credit provided by Key Bank. The amount of the credit enhancement is dynamic and fluctuates with the credit quality and composition of Series II's asset portfolio. Liquidity support for the Series II ABCP will be provided by liquidity asset purchase agreements (LAPAs) provided by Prime-1 rated Key Bank or other Prime-1-rated banks. The LAPAs will fund subject to a borrowing base test pertinent to each transaction, and will be reviewed by Moody's prior to the purchase of any asset.
For further details, please see Moody's press release dated December 11, 2000.
MOODY'S RATES SIEFUNDS CORP. ABCP PRIME-1; SIEFUNDS ACQUIRES £403 MILLION PORTFOLIO OF HIRE PURCHASE AND LEASE PURCHASE RECEIVABLES
Moody's has assigned a Prime-1 rating to the asset-backed commercial paper (ABCP) issued under a new, partially supported, multiseller ABCP program sponsored by Siemens AG. This is the first ABCP conduit to be sponsored by Siemens AG (rated Aa3 for senior unsecured debt and Prime-1 for commercial paper). Although it is unusual for a conduit to be sponsored by a non-bank, Moody's obtained comfort from the fact that the obligations of service providers such as the program administrator are guaranteed by Prime-1-rated Siemens AG.
ABCP will be issued by Siefunds Corp. (Siefunds), a bankruptcy remote Delaware special purpose vehicle. Siefunds will issue U.S.-dollar-denominated ABCP and euro-denominated ECP. ABCP issuance proceeds will be finance the purchase of assets comprising present and/or future receivables of all kinds, including consumer loan receivables, securities and tangible assets.
Pool-specific liquidity support for Siefunds' ABCP will provide funds in an amount based on the amount of non-defaulted assets. A program-wide irrevocable and unconditional letter of credit will be provided by Siemens AG (as guarantor) in the amount of 5% of the outstanding ABCP (excluding transactions involving asset-backed securities rated P-1). ABCP may not be issued if program credit enhancement has been drawn down for more than 30 days. Interest rate and foreign exchange hedging will be arranged with Siemens AG serving as counterparty. Siemens Capital Corp., a corporation organised under the laws of Delaware, will serve as administrator. The performance and financial obligations of the Administrator are guaranteed by Siemens AG.
As its first transaction, Siefunds acquired a £403 million portfolio of hire purchase and lease purchase receivables. The transaction is partially supported by a liquidity facility provided by Siemens AG (as guarantor) and Bayerische Landesbank. Losses on the portfolio will be absorbed by the following credit enhancement: 7% cash collateral, 13.5% seller specific letter of credit, 3.5% excess spread and 5% program-wide letter of credit. Any currency or interest rate risk is fully hedged.
For further details, please see Moody's press release dated December 8, 2000.
THE RATINGS OF THE FOLLOWING ABCP PROGRAMS WERE CONFIRMED BY MOODY'S DURING THE SEVEN DAY PERIOD ENDED DECEMBER 7, 2000:
IN CLUB DEAL, TWIN TOWERS AND EIFFEL PURCHASE CREDIT CARD NOTES
Twin Towers Inc, a partially-supported, multiseller conduit sponsored by Deutsche Bank, and Eiffel Funding LLC, a partially-supported, multiseller conduit sponsored by CDC-FP, purchased $180 million and $153 million, respectively, of Aaa-rated Class A and A2-rated B Notes from a newly issued series of a credit card master trust from a domestic, large bank issuer of credit cards. Twin Towers bought only Class A notes, while Eiffel purchased $127.5 million of Class A and $25.5 million of Class B notes. Program-level credit enhancement was increased by 8% for the Class B notes in Twin Towers, while Eiffel increased its program-level credit enhancement by 5% for the Class A Notes and 10% for the Class B Notes.
Twin Towers may issue up to $5 billion of ABCP; and has about $300 million in program-level credit enhancement. Eiffel is authorized to issue approximately $1.2 billion of authorized ABCP and has approximately $100 million in program-level credit enhancement.
WACHOVIA'S BLUE RIDGE FUNDS A $50 MILLION EQUIPMENT LEASE RECEIVABLES TRANSACTION
Wachovia's Blue Ridge Asset Funding Corp., a partially supported, multiseller conduit, recently funded a $50 million equipment lease receivables facility for an unrated small-ticket leasing company. The leases are for computer equipment, peripherals and software, and are "triple-net," "hell or high water" leases. There is a minimum of $20 million (or 40%) of credit enhancement in this deal, which is sufficient to cover the deal's exposures to the top 7 obligors. Partial liquidity support will be provided by Prime-1-rated Wachovia Bank. Wachovia will also increase Blue Ridge's program credit enhancement by 10% of the purchase limit of this transaction, or $5 million. Blue Ridge now funds 33 transactions and is authorized to issue up to approximately $5.865 billion of ABCP.
RABOBANK'S ERASMUS FUNDS $770 MILLION LOAN FACILITY
Erasmus Capital Corp., the Prime-1 rated, partially supported multiseller conduit sponsored by Prime-1 rated Rabobank International, London Branch, funded a $770 million guaranteed loan facility to an unrated European sugar and sugar products manufacturer.
The transaction is supported by transaction-specific letters of credit issued by Prime-1 rated banks in an amount equal to 100% of outstanding principal. Interest and fees under the loan facility are guaranteed via a credit default swap provided by Rabobank. In addition, a liquidity facility provided by Rabobank funds for the face amount of outstanding ABCP, subject to the occurrence of certain credit events in relation to the LOC providers. There is no additional program-level credit enhancement provided in relation to this transaction. Any currency or interest rate risk is hedged via swaps provided by Rabobank. Erasmus is currently authorized to issue up to $1.048 billion of ABCP.
STATE STREET'S FRIGATE FUNDING CORP. ACQUIRES $65 MILLION CREDIT CARD VARIABLE FUNDING CERTIFICATE
Frigate Funding Corp., the partially supported, multiseller ABCP program sponsored by State Street Capital Markets, LLC has purchased a $65 million variable funding certificate backed by credit card receivables. The certificates are guaranteed by a Aaa-rated monoline insurer, and State Street liquidity fronts for the surety bond. Frigate is currently authorized to issue up to $1.473 billion of ABCP.
STATE STREET'S GALLEON CAPITAL CORP. ACQUIRES $35 MILLION IN MORTGAGE CERTIFICATES
Galleon Capital Corp., the partially supported, multiseller ABCP program sponsored by State Street Capital Markets, LLC, has purchased $20 million of Aa3-rated certificates and $15 million of Baa2-rated certificates backed by United Kingdom residential mortgages. The transactions are fully supported through the program letter of credit provided by Prime-1-rated State Street Bank & Trust Co. Galleon is currently authorized to issue up to $868.9 million of ABCP.
BLB's GENERAL FUNDING LIMITED BUYS EURO 460 MILLION IN FRENCH ABS BACKED BY TRADE RECEIVABLES
General Funding Limited, a fully supported ABCP program sponsored by Bayerische Landesbank Girozentrale (BLB), acquired additional assets for a maximum total amount of euro 460 million. The assets consist of Fonds Communs de Creances (FCC) senior units (French ABS) backed by trade receivables owned by the French tobacco company Seita. General Funding Limited uses the issuance proceeds of Euro-denominated Billets de Tresorerie (French ABCP) to fund the purchase of FCC units.
Moody's confirmation of the Prime-1 rating assigned to General Funding Limited is primarily based upon the full support provided by Prime-1 rated banks Credit Industriel et Commercial and Bayerische Landesbank Girozentrale. Support in the form of asset-specific purchase and sale agreements absorbs all credit risk associated with the underlying assets and liquidity risk, allowing General Funding Limited to repay any maturing Billets de Tresorerie in a timely manner. Syndication of support commitments with other Prime-1 banks rated is possible, subject to Moody's confirmation of the rating of the Billets de Tresorerie issued by General Funding Limited.
The Prime-1 rating also reflects the integrity of the structure, including the bankruptcy-remote nature of General Funding Limited. The conduit is now authorized to issue ABCP of up to euro 640 million.
BANK OF AMERICA'S HATTERAS ADDS $638 MILLION SYNTHETIC LEASE TRANSACTION
Hatteras Funding Corp., a fully supported, multiseller conduit sponsored and administered by Bank of America, NA, entered into a revolving credit facility with a Aa3- rated seller, which funds the purchase, construction and installation of power generating equipment and facilities. The transaction is fully supported by a liquidity facility provided by Prime-1-rated Bank of America and a syndicate of banks. Hatteras now funds a total of 19 transactions and is authorized to issue up to approximately $5.3 billion of ABCP.
COMMERZBANK'S KAISERPLATZ ADDS EURO 100 MILLION TRADE RECEIVABLES DEAL
Kaiserplatz Funding Limited, a partially supported, multiseller ABCP program sponsored by Commerzbank, has purchased its first asset interest: a euro 100 million interest in a revolving pool of trade receivables originated by two subsidiaries of an unrated German corporation. The transaction is partially supported by a default reserve of 7%. The transaction also has several performance-based termination events that will force the conduit to cease funding new receivables if portfolio performance should deteriorate.
The Kaiserplatz liquidity provision is unique in that it is the first European conduit in which the interest component of ABCP is not covered by liquidity provided by Prime-1 rated banks, but is instead being supplied by unrated sellers through cash. Thus, the seller will provide the interest element of liquidity prior to the closing day of the transaction and each time prior to issuance of ABCP. The amount of this advance is calculated by Kaiserplatz Purchasing Co. The advance is then invested in a readily available account held in the name of Kaiserplatz Purchasing Co. with a Prime-1-rated bank. Funds for payment of ABCP interest are intended to be available on a same-day basis in every circumstance, including the bankruptcy of the seller.
Each Kaiserplatz transaction will be reviewed and approved by Moody's prior to execution. Kaiserplatz is currently authorized to issue commercial paper with net proceeds up to the equivalent of €100 million.
MONT BLANC CAPITAL CORP. ADDS EURO 275 MILLION VEHICLE DEALER LOAN PURCHASE
Mont Blanc Capital Corp., a partially supported, multiseller ABCP conduit sponsored by ING Barings Limited ("ING"), has purchased a euro 275 million interest in a pool of vehicle dealer loans originated by an unrated finance company. This transaction is fully supported by liquidity provided by Prime-1 rated ING Bank N.V. Mont Blanc is now authorized to issue approximately $2.4 billion of ABCP.
CHASE'S PARCO INCREASES EXISTING AUTO LOAN RECEIVABLES TRANSACTION BY $640 MILLION
Park Avenue Receivables Corporation (PARCO), a partially supported, multiseller conduit sponsored and administered by The Chase Manhattan Bank, increased an existing, $300 million amortizing facility which provides funds for the purchase of retail auto loan receivables generated by an investment-grade-rated seller. This transaction is partially supported by (1) pool-specific enhancement of approximately 6.5%; (2) liquidity provided by Prime-1-rated Chase Manhattan Bank, and (3) program-level credit enhancement equal to 10% of the purchase commitments. The program enhancement in PARCO also has a $300 million floor. PARCO now funds a total of 66 transactions and is authorized to issue up to approximately $14.9 billion of ABCP.
BARCLAYS' SHEFFIELD COMMITS TO BUY 100 MILLION POUNDS STERLING OF CREDIT CARD RECEIVABLES
Sheffield Receivables Corp., a partially supported, multiseller ABCP conduit sponsored by Barclays Bank plc, has made a 100 million pound sterling commitment to purchase credit card receivables originated by an unrated United Kingdom-based seller. The transaction is fully supported though liquidity provided by Prime-1-rated Barclays, and incremental program credit enhancement of 10% of this transaction is also being added. Sheffield is now authorized to issue up to $15.302 billion of ABCP.
BNP PARIBAS' STARBIRD FUNDING CORP. PURCHASES $20 MILLION OF A COLLATERAL INTEREST IN A CREDIT CARD MASTER TRUST
Starbird Funding Corp., BNP Paribas' partially supported, multiseller conduit, purchased a $20 million interest in a collateral interest tranche in a newly issued series from an existing credit card master trust of a Baa1-rated large bank issuer of credit cards. Program-level credit enhancement was increased by $6.7 million to its present level of $72 million. Starbird Funding is now authorized to issue up to $2 billion in ABCP.
CIBC'S SUPERIOR FUNDING AMENDS SHORT-TERM RECEIVABLES FACILITY
CIBC'S Superior Funding Capital Corp., a partially supported multiseller ABCP program, has amended a transaction pursuant to which Superior finances a pool of quickly liquidating receivables originated by an investment-grade-rated international industrial corporation. The receivables reflect the obligations of both corporate as well as individual obligors. The purchase limit for this deal has been increased from $185 million to $375 million; and three additional companies have been approved as eligible sellers. The transaction is supported by a 6.5% default reserve. Superior is now authorized to issue up to approximately $1.43 billion in ABCP.
THREE PILLARS FUNDING ADDS $62 MILLION TRADE RECEIVABLES FACILITY
Three Pillars Funding Corp., SunTrust Bank's partially supported, multiseller ABCP conduit, added a $62 million revolving loan facility. The seller is a truckload carrier that provides just-in-time and other premium transportation services for its customers throughout the United States. Liquidity provided by Prime-1-rated SunTrust Bank, partially supports this transaction. Overcollateralization is a minimum of 12.1%, which increases dynamically based upon performance. Program-level credit enhancement was increased by 10% for this deal. Three Pillars is currently authorized to issue up to $1.66 billion of ABCP.
ABN AMRO'S TULIP ADDS TWO PORTFOLIOS
Tulip Funding Corp., the fully supported, multiseller ABCP conduit administered by ABN AMRO Bank N.V. (ABN AMRO), purchased two new portfolios: the first, a $100 million portfolio originated by a Belgium food manufacturer; and the second, a €300 million portfolio of Dutch mortgage loans.
Tulip is fully supported through liquidity for 90% of the deal and a program standby letter of credit for the remaining 10%, each provided by Prime-1-rated ABN AMRO. The letter of credit serves as both liquidity and credit enhancement. Tulip may now issue up to approximately $7.7 billion of ABCP.
For a more detailed description of these ABCP programs, see Moody's GLOBAL ASSET-BACKED COMMERCIAL PAPER MARKET REVIEW, which is published quarterly.
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