S&P Affirms PG&E-1 Stranded Cost ABS

Apr 11, 2001, 01:00 ET from Standard & Poor's

    NEW YORK, April 11 /PRNewswire/ -- Standard & Poor's today affirmed its
 triple-'A' ratings on all bonds issued by the California Infrastructure &
 Economic Development Bank Special Purpose Trust PG&E-1 (PG&E-1) (see list).
     The servicer, Pacific Gas & Electric Co. (D/-/D), filed for protection
 under Chapter 11 of the U.S. Bankruptcy Code on April 6, 2001.  The bankruptcy
 filing has not affected (and in Standard & Poor's view, is not likely to
 affect) the triple-'A' ratings assigned to PG&E-1.
     The performance of PG&E-1 has been inline with Standard & Poor's
 expectations established at closing in December 1997.  The available credit
 enhancement in the capital and the overcollateralization subaccounts are at
 the required levels.  In addition, the transaction benefits from the
 transition charge true-up mechanism that reconciles expected usage to actual
 usage and replenishes the overcollateralization account as required.
     The original rating analysis incorporated various stress scenarios,
 including a servicer bankruptcy.  Stressed cash flow runs incorporated usage
 declines and increased customer charge-offs, as well as an increase in the
 servicing fee to the maximum possible amount.  Additionally, Standard & Poor's
 assumed that, in every year of the transaction, a certain amount of cash
 (generally an amount representing the peak month's collections) is lost due to
 the bankruptcy of the servicer (which may be either the sponsoring utility or
 a substitute servicer).
     Notwithstanding the provisions in the state legislation and/or financing
 orders dealing with the transfer of the transition property and protection of
 funds that are commingled with the utility's cash accounts, it is possible
 that the bankruptcy court may stay the transition charge collections pending
 reorganization of the servicer.  Nonetheless, based in part on legal opinions
 received from outside counsel on the rated transactions, Standard & Poor's has
 derived comfort that the legislative provisions regarding commingling,
 absolute transfer of the transition property, and first priority perfected
 security interest in the transition property will be recognized and respected
 by a bankruptcy court.  Until evidence comes to light to suggest that a
 bankruptcy court would not respect these legislative provisions, which is in
 Standard & Poor's view unlikely, there is no currently apparent reason to
 change the rating of the bonds, Standard & Poor's said. -- CreditWire
 
     OUTSTANDING RATINGS AFFIRMED
 
     California Infrastructure & Economic Development Bank Special Purpose
 Trust PG&E-1 (PG&E-1)
     Class                                      Rating
     A-4 $300 million certs due 6/25/2003       AAA
     A-5 $290 million certs due 6/25/2004       AAA
     A-6 $375 million certs due 9/25/2005       AAA
     A-7 $866 million certs due 9/25/2008       AAA
     A-8 $400 million certs due 12/26/2009      AAA
 
 

SOURCE Standard & Poor's
    NEW YORK, April 11 /PRNewswire/ -- Standard & Poor's today affirmed its
 triple-'A' ratings on all bonds issued by the California Infrastructure &
 Economic Development Bank Special Purpose Trust PG&E-1 (PG&E-1) (see list).
     The servicer, Pacific Gas & Electric Co. (D/-/D), filed for protection
 under Chapter 11 of the U.S. Bankruptcy Code on April 6, 2001.  The bankruptcy
 filing has not affected (and in Standard & Poor's view, is not likely to
 affect) the triple-'A' ratings assigned to PG&E-1.
     The performance of PG&E-1 has been inline with Standard & Poor's
 expectations established at closing in December 1997.  The available credit
 enhancement in the capital and the overcollateralization subaccounts are at
 the required levels.  In addition, the transaction benefits from the
 transition charge true-up mechanism that reconciles expected usage to actual
 usage and replenishes the overcollateralization account as required.
     The original rating analysis incorporated various stress scenarios,
 including a servicer bankruptcy.  Stressed cash flow runs incorporated usage
 declines and increased customer charge-offs, as well as an increase in the
 servicing fee to the maximum possible amount.  Additionally, Standard & Poor's
 assumed that, in every year of the transaction, a certain amount of cash
 (generally an amount representing the peak month's collections) is lost due to
 the bankruptcy of the servicer (which may be either the sponsoring utility or
 a substitute servicer).
     Notwithstanding the provisions in the state legislation and/or financing
 orders dealing with the transfer of the transition property and protection of
 funds that are commingled with the utility's cash accounts, it is possible
 that the bankruptcy court may stay the transition charge collections pending
 reorganization of the servicer.  Nonetheless, based in part on legal opinions
 received from outside counsel on the rated transactions, Standard & Poor's has
 derived comfort that the legislative provisions regarding commingling,
 absolute transfer of the transition property, and first priority perfected
 security interest in the transition property will be recognized and respected
 by a bankruptcy court.  Until evidence comes to light to suggest that a
 bankruptcy court would not respect these legislative provisions, which is in
 Standard & Poor's view unlikely, there is no currently apparent reason to
 change the rating of the bonds, Standard & Poor's said. -- CreditWire
 
     OUTSTANDING RATINGS AFFIRMED
 
     California Infrastructure & Economic Development Bank Special Purpose
 Trust PG&E-1 (PG&E-1)
     Class                                      Rating
     A-4 $300 million certs due 6/25/2003       AAA
     A-5 $290 million certs due 6/25/2004       AAA
     A-6 $375 million certs due 9/25/2005       AAA
     A-7 $866 million certs due 9/25/2008       AAA
     A-8 $400 million certs due 12/26/2009      AAA
 
 SOURCE  Standard & Poor's