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Rating Action:

Moody's Assigns Prime-1(sf) Rating to Clarity Trust

15 Nov 2012

Authorized Amount: Canadian $1.5 billion

New York, November 15, 2012 -- Moody's Investors Service has assigned a Prime-1 (sf) rating to the Series A Class A Notes issued by Clarity Trust ("Clarity"). Clarity is a prior review, partially supported multi-seller Canadian asset-backed commercial paper ("ABCP") program administered by National Bank Financial Inc. ("NBF"), a wholly owned subsidiary of National Bank of Canada ("NBC" rated Aa2 on review for possible downgrade/Prime-1/B- on review for possible downgrade).

RATINGS RATIONALE

Clarity is a Canadian trust with Computershare Trust Company of Canada as Issuer Trustee. The trust is structured to provide for the bankruptcy remoteness of the program in a manner consistent with Moody's Prime-1(sf) rating.

Clarity purchases pools of receivables backed by various types of assets and funds these receivables by issuing notes. The notes may be denominated in both Canadian dollars and U.S. dollars. The assets can also be purchased in both Canadian dollars and U.S. dollars

Series A may issue senior and subordinate debt, including short-term notes (known as "Class A Notes") and medium term notes (known as "Class FRN Notes"). Currently, only Class A Notes are expected to be issued in Series A. The Class A Notes are senior short-term notes, which is standard ABCP. The Class A Notes have a maximum tenor of 364 days and may not be redeemed prior to the maturity date. The Class A Notes rank senior to all subordinate notes issued out of the same Series. No new Series or transactions supporting the notes may be added without Moody's prior review.

In addition to the notes issued out of Series A, Clarity will issue a Series D Class FRN Note for Canadian $2.5 million. The proceeds from this note will be placed in permitted investments and will be available to cover losses experienced by Clarity in excess of the credit enhancement supporting any asset pool. It is not intended to be used as a form of program-wide credit enhancement since it is not available to repay maturing notes at any time. Instead, it will be available to repay Class A noteholders and other secured parties, including liquidity banks, after an event of possession occurs in the program and after the collateral value of the asset associated with this event is zero. Moody's is not rating the Series D Class FRN Note.

Program-wide Credit Enhancement

Program Wide Credit Enhancement in the form of a Letter of Guarantee provided by NBC. It equals to $15 million, with a floor of $5 million. PWCE funds for any shortfalls needed to repay the Class A Notes.

Single Program Liquidity Facility

Series A has a single program-level liquidity facility that can be used to repay Class A Notes issued by that Series. Liquidity is not available to purchase new assets if Clarity is unable to issue notes to finance these purchases. Since Clarity is not a committed purchaser or lender, this is not an issue. The liquidity commitment can never be less than the face amount of the outstanding Class A Notes. Although the commitment is sized to cover the face amount of the notes, the available funding under the liquidity facility will be limited by the amount of defaulted receivables in excess of transaction-specific credit enhancement.

Liquidity will cover seller recourse items, such as dilution and deemed collections, as well as commingling risk. Additionally liquidity will fund for the interest through maturity on the Class A Notes. The liquidity facility is not required to make a payment if Clarity becomes bankrupt. Since Clarity is structured to be bankruptcy-remote, the likelihood of this event is commensurate with a Prime-1(sf) rating.

The Prime-1 (sf) rating assigned to the Class A Notes issued by Series A is based on, among other factors, the following:

1. Moody's prior review of all transactions to ensure that the asset credit quality is consistent with the Prime-1(sf) rating assigned to the Class A Notes;

2. Program-level liquidity support provided by Prime-1-rated NBC that will fund for non-defaulted assets;

3. The experience of NBF as the administrator of Clarity to recommend new asset purchases, monitor compliance, and ensure the timely issuance and payment of Class A Notes; and

4. Structural protections to ensure the bankruptcy-remoteness of Clarity.

The combination of a high quality receivables portfolio and liquidity support provided by Prime-1-rated NBC offers Class A noteholders protection from loss and repayment at a certainty consistent with a Prime-1(sf) rating.

Parties to the Programs

NBC, through its subsidiary NBF, plays a key role in the asset and liability management of the trust. As the financial services agent and administrative agent, NBF and NBC are responsible for the daily operations of the trust and its activities. In addition, NBC and its subsidiaries take on other roles to ensure that Clarity continues to run effectively, such as the issuing and paying agent, and liquidity agent. NBC's unsecured long term indebtedness is rated Aa2, its short term obligations are Prime-1, and its bank financial strength rating is B-. The long term rating and the bank's financial strength ratings are on review for possible downgrade.

The principal methodology used in this rating was "Moody's Approach to Rating Asset-Backed Commercial Paper," published in May 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com

Information sources used to prepare the rating are the following: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service information.

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments in this transaction.

Further information on the representations and warranties and enforcement mechanisms available to investors are available on www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF306879

Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.

Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history.

The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Kai-Ling Chang
Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Everett Rutan
Senior Vice President
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Assigns Prime-1(sf) Rating to Clarity Trust
No Related Data.
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