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Rating Action:

Moody's reviews 5 gray-zone interest asset ABS for possible downgrade

02 Mar 2010

Tokyo, March 02, 2010 -- Moody's Investors Service has today placed under review for possible downgrade the ratings of 5 securitized transactions. Also, the rating agency continues its review of the ratings for possible downgrade, for one transaction.

All 6 transactions (listed below) are backed by loan receivables which involve payments (both current and prior) of gray-zone interest* ("gray-zone interest assets"). Furthermore, back-up servicing is delegated to servicer firms regulated under the Act on Special Measures concerning the Business of Management and Collection of Claims -- Servicer Law.

(* Interest rate caps for money lending are stipulated by both the Interest Rate Restriction Law -- IRRL -- and the Capital Subscription Law in Japan. Interest charged between the two cap interest rates is called "gray-zone interest".)

The rating actions reflect the current credit quality of the servicers and greater uncertainty over back-up servicing.

Moody's has also determined that the uncertainty over back-up servicing will not negatively affect the ratings for other transactions backed by gray-zone interest assets, including deals where originators/servicers are consumer credit or credit card companies, at this time.

The complete rating actions follow:

Deal Name: LC Trust 3

Seller/Servicer: Life Co., Ltd.

....Senior Beneficial Interest Certificate, Aa1 Placed Under Review for Possible Downgrade; previously on January 26, 2010, Confirmed at Aa1

Underlying Asset: Card loan receivables

Deal Name: Guardian Program

... Aaa Placed Under Review for Possible Downgrade; previously on January 26, 2010, Confirmed at Aaa

Underlying Asset: Consumer loan receivables

Deal Name: Golden Gate One, LLC.

...Class A, Aaa Placed Under Review for Possible Downgrade; previously on January 26, 2010, Confirmed at Aaa

........Underlying Rating: Aaa Placed Under Review for Possible Downgrade; previously on January 26, 2010, Confirmed at Aaa

....Class X, Aaa Placed Under Review for Possible Downgrade; previously on January 26, 2010, Confirmed at Aaa

Underlying Asset: Credit card shopping receivables and cash advance receivables

Deal Name: Project Golden Gate One

.... Senior Card Cashing Receivables Beneficial Interests Certificate, Aaa Placed Under Review for Possible Downgrade; previously on January 26, 2010, Confirmed at Aaa

Underlying Asset: Credit card cash advance receivables

Deal Name: Rainbow One Co., Ltd.

... Class A, Aaa Placed Under Review for Possible Downgrade; previously on January 26, 2010, Confirmed at Aaa

...Underlying Rating: Aaa Placed Under Review for Possible Downgrade; previously on January 26, 2010, Confirmed at Aaa

...Class X, Aaa Placed Under Review for Possible Downgrade; previously on January 26, 2010, Confirmed at Aaa

Underlying Asset: Consumer loan receivables

Deal Name: Eiwa Trust 2006

Seller/Servicer: Eiwa Co., Ltd.

.... Senior Beneficial Interests B, Remains Aa2 On Review for Possible Downgrade; previously on November 6, 2009, Aa2 Placed Under Review for Possible Downgrade

.... Mezzanine Beneficial Interests, Remains Baa1 On Review for Possible Downgrade; previously on December 17, 2009, Downgraded to Baa1 from A3 and Remains On Review for Possible Downgrade

Underlying Asset: Consumer loan receivables

With all 6 deals, the rating actions mainly reflect:

1) The possibility of servicer replacement and of back-up servicers taking over as a result of the lower credit quality of the servicers.

2) Concerns over the final version of the revised guidelines to be issued by the Ministry of Justice ("MOJ") and greater uncertainty over back-up servicing.

On January 25, the MOJ called for comments on its proposed revision of operational guidelines for the inspection and supervision of servicer firms. By 'servicer firms', the MOJ is referring to all companies regulated under the Servicer Law. These firms are defined as "regulated servicers" in the press release.

The proposed revisions include clauses on receivables with the "gray-zone interest". These clauses include the following:

(i) Re-calculating the principal amount -- based on the maximum interest rate under the IRRL -- should be carried out by returning to the loan agreement date when the receivables were first generated.

(ii) The principal amount of receivables will be re-calculated based on (i) above, even when the regulated servicers give notice to obligors about repayment amounts.

While the deadline for the comments has passed, the final form of the revised guidelines and their timing are uncertain. Depending on the final form of the revised guidelines, there may be a negative impact on the ratings of all 6 transactions due to increased uncertainty over back-up servicing.

By "uncertainty over back-up servicing", we refer to the following factors:

- The regulated servicers may change their back-up servicing policy resulting in a recalculation of the principal amount when back-up servicing to address the revised guidelines.

- Availability of back-up servicing, other than the regulated servicers, may be low because of the servicers' low credit quality.

As the impact on the ratings will depend on the final version of the guidelines, Moody's will carefully monitor the conclusion of the revised guidelines. The following will also be considered when determining rating actions:

· The regulated servicer's policy on back-up servicing (including business acceptance and servicing policies).

· The asset trustee's policy and actions on consignment of back-up servicing.

For those transactions backed by gray-zone interest assets and which are not currently affected, Moody's believes that a rating action is not necessary at this time, as the uncertainty over back-up servicing will not negatively affect the ratings. This is because the servicers' current credit quality is relatively high and therefore the possibility of back-up servicer taking place is low. Moody's also believes that other back-up servicers will be available, at least to a degree, beyond regulated servicers.

However, if Moody's is of the opinion that a servicer's credit quality has declined or the availability of back-up servicers is lower than Moody's expectation, there may be a negative impact on the ratings.

The principal methodology used in rating these transactions was Moody's "Approach to Monitoring ABS Ratings in Japan, Volume 4: Revolving Diversified Pool ABS Backed by Card Receivables" published in December 2006, which can be found at www.moodys.com in the Research & Ratings directory, in the Ratings Methodologies subdirectory.

Other methodologies and factors that may have been considered in the process of rating these transactions can also be found in the Rating Methodologies subdirectory. In addition, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SFQuickCheck.

Moody's Investors Service is a publisher of rating opinions and research. It is not involved in the offering or sale of any securities, nor is it acting on behalf of the offering party. This release is not a solicitation or a recommendation to buy, hold, or sell securities.

Tokyo
Yumiko Kitaoka
Asst Vice President - Analyst
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Tokyo
Mitsuteru Masuoka
VP - Senior Credit Officer
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100

Moody's reviews 5 gray-zone interest asset ABS for possible downgrade
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