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Rating Action:

Moody's downgrades classes of notes issued by Alba 2007-1 plc

31 Mar 2009

Approximately GBP 626 million of debt securities affected

London, 31 March 2009 -- Moody's Investors Service has today taken the following rating action on notes issued by Alba 2007-1 plc ("Alba 2007-1"):

-Class A2 Downgraded to Aa1; previously on October 20, 2008 Placed Under Review for Possible Downgrade;

-Class A3 Downgraded to Aa1; previously on October 20, 2008 Placed Under Review for Possible Downgrade ;

-Class B Confirmed at Aa3; previously on October 30, 2008 Downgraded to Aa3 from Aa2 and maintained Under Review for Possible Downgrade ;

-Class F Downgraded to Caa3; previously on October 30, 2008 Downgraded to Caa1 from Ba2 and maintained Under Review for Possible Downgrade ;

Moody's has not rated classes C, D and E. No action is taken on the rating of the MERC certificates.

The rating action on the Class A2 and Class A3 Notes was prompted by the absence of a liquidity facility in the transaction which could impair the ability of the Issuer to make timely payment of interest on these Notes. The rating action on the Class F was mainly prompted by the weak performance of the collateral and took into consideration increased portfolio loss expectations.

Today's rating actions conclude the review for downgrade which was initiated on 20th of October 2008 following the expiry of the liquidity facility without a stand-by drawing being made, due to a failure to deliver a renewal request within the notice period. Moody's believes that under current market conditions the appointment of a new liquidity facility provider is very unlikely. As a result, for this analysis, Moody's assumed that this transaction will no longer benefit from a liquidity facility. Any future changes to the liquidity structure will be taken into account and Moody's will re-evaluate the ratings accordingly.

Moody's believes that the absence of a liquidity facility in the transaction could impair the ability of the Issuer to make timely payment of interest on the Notes, particularly if delinquencies spike up to higher levels than currently observed. As of the last reporting date all senior costs and interest payments were covered by available excess spread. However, if delinquencies were to further increase reducing the excess spread to zero, the only other remaining source of liquidity would be the cash reserve fund. So far the cash reserve has been partially used to cover losses and it is now equal to 0.44% of the current portfolio balance. The current balance of the reserve fund is not sufficient to meet all the senior expenses and the senior note costs which ,as of the last payment date, were equal to 0.68% of the current portfolio balance, excluding payments to the swap counterparty. Moody's considers that the risk of a missed payment of interest on the Class A2 and Class A3 Notes is not commensurate with a Aaa-rating and therefore has downgraded ratings for these classes of Notes.

In Moody's opinion, however, the absence of a liquidity facility is unlikely to expose the Issuer to swap termination payments and consequently to increase the credit losses for the Notes. All the swaps in the transaction are provided by Credit Suisse International (Aa1, P-1). The currency swap has been terminated as Class A1b (Euro denominated) was repaid in full on the March 2009 payment date. From the next interest payment date and as long as the Bank of England Base Rate (BBR) continues to be relatively lower than the 3 month LIBOR rate, Moody's estimates that the Issuer will be in-the-money on a net basis for all the remaining interest rate swaps. Therefore, there is only a remote risk that the Issuer could default in its swap payment obligations even in case of a liquidity shortfall.

Moody's has also adjusted the loss expectation for Alba 2007-1 to 5% of original balance from a level in the range of 2.8% to 3.2% assumed as of the last performance review and has maintained the Milan AaaCE credit enhancement (MILAN AaaCE) at approximately 30%. The current available subordination for class A3 (the most junior Aaa class in the transaction) is equal to 32.87%, including the remaining reserve fund. The loss expectation and the MILAN AaaCE are the two key parameters used to calibrate the loss distribution curve, which is a core input for the cash-flow model Moody's is using to rate RMBS transactions.

Since the last rating review in October 2008, the cumulative realized losses have increased from 0.22% to 0.95% of the original portfolio balance. The increase in losses has also resulted in further reserve fund drawings. After the last payment date the reserve fund was equal to 0.44% of the current note balance (33% of the target balance). According to the March 2009 Investor report, the total delinquency loans accounted for 22.5% of the current pool balance and the 90+ delinquencies, excluding repossessions, were equal to 14.1% of current portfolio balance. In the review analysis Moody's took also into account that the decline in the monthly installments for most of the loans due to the reversion from fixed to floating and the drop in the base rates, has resulted in higher arrears multiples on the reported delinquent loans. Alba 2007-1 closed in June 2007 and its current pool factor is approximately 76%.

The collateral included in Alba 2007-1 was originated by GMAC RMC. Homeloan Management Limited (SQ2+) is the primary servicer while Oakwood Homeloans Limited is the special servicer. There is no appointed back-up servicer. The cash manager for this transaction is HSBC Bank plc.

Moody's monitors this transaction using the rating methodology for EMEA RMBS as described in the Rating Methodology reports "Moody's Approach to Rating UK RMBS" published in April 2005 , "Moody's Updated Methodology for Rating UK RMBS" published in November 2007 and "Revising Default/Loss Assumptions Over the Life of an ABS/RMBS Transaction" published in December 2008. The latest rating action on the notes issued by Alba 2007-1 was taken by Moody's on 30th October 2008. Moody's will continue to monitor closely the performance of this transaction.

Please refer to the "UK Non-Conforming RMBS Q4 2008 Indices", which can be found on www.moodys.com under the Credit Index category of Structured Finance research.

London
Barbara Rismondo
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

London
Kostas Skliros
Associate Analyst
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's downgrades classes of notes issued by Alba 2007-1 plc
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