S&P Lowers Cathedral Ltd.'s B Notes; Off Watch Neg

Apr 27, 2001, 01:00 ET from Standard & Poor's Ratings Services

    LONDON, April 27 /PRNewswire/ -- Standard & Poor's today lowered its
 rating on the class B floating-rate notes issued by Cathedral Ltd. and removed
 the rating from CreditWatch with negative implications, where it had been
 placed on July 5, 2000. Standard & Poor's today also placed its rating on the
 class A notes on CreditWatch with negative implications and affirmed its
 rating on the class C notes (see list below).
     The rating actions on the notes follow the increase in the expected
 default rate at the triple-'B' level caused by the replacement of National
 Power PLC by International Power PLC (BB/Stable/--) as reference entity in the
 portfolio, which in turn is a result of the demerger of National Power and the
 overall deterioration of the credit quality of the pool.
     Any material further migration in the credit quality of the portfolio
 would likely result in additional rating actions being taken for all classes.
     The reference pool is a $466.3 million static pool comprising 52 bonds
 issued by corporates and financial institutions. Original credit enhancement
 levels in the pool have been reduced by the default of Laidlaw Inc. in May
 2000, following which the class B notes were placed on CreditWatch with
 negative implications and the class C notes were downgraded to single-'B' from
 double-'B'.
     Under the terms of the credit default swap, the face amount of the notes
 will be reduced as a result of cumulative losses in the reference pool in
 excess of the first loss protection amount. Cathedral's ratings continue to
 reflect the credit quality of the reference credits, the level of credit
 enhancement provided by subordination and Dresdner Bank AG's ability to meet
 its payment obligations as counterparty under the credit default swap,
 Standard & Poor's said.
 
      RATING LOWERED AND REMOVED FROM CREDITWATCH
      Cathedral Ltd.
      $16.5 Million Floating-Rate Notes Due May 2004
                       To               From
      Class B          BB+              BBB/Watch Neg
 
      RATING PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS
      Cathedral Ltd.
      Eur404 Million Floating-Rate Notes Due May 2004
                       To               From
      Class A          AAA/Watch Neg    AAA
 
      OUTSTANDING RATING AFFIRMED
      Cathedral Ltd.
      $8.5 Million Floating-Rate Notes Due May 2004
      Class C          B
 
 

SOURCE Standard & Poor's Ratings Services
    LONDON, April 27 /PRNewswire/ -- Standard & Poor's today lowered its
 rating on the class B floating-rate notes issued by Cathedral Ltd. and removed
 the rating from CreditWatch with negative implications, where it had been
 placed on July 5, 2000. Standard & Poor's today also placed its rating on the
 class A notes on CreditWatch with negative implications and affirmed its
 rating on the class C notes (see list below).
     The rating actions on the notes follow the increase in the expected
 default rate at the triple-'B' level caused by the replacement of National
 Power PLC by International Power PLC (BB/Stable/--) as reference entity in the
 portfolio, which in turn is a result of the demerger of National Power and the
 overall deterioration of the credit quality of the pool.
     Any material further migration in the credit quality of the portfolio
 would likely result in additional rating actions being taken for all classes.
     The reference pool is a $466.3 million static pool comprising 52 bonds
 issued by corporates and financial institutions. Original credit enhancement
 levels in the pool have been reduced by the default of Laidlaw Inc. in May
 2000, following which the class B notes were placed on CreditWatch with
 negative implications and the class C notes were downgraded to single-'B' from
 double-'B'.
     Under the terms of the credit default swap, the face amount of the notes
 will be reduced as a result of cumulative losses in the reference pool in
 excess of the first loss protection amount. Cathedral's ratings continue to
 reflect the credit quality of the reference credits, the level of credit
 enhancement provided by subordination and Dresdner Bank AG's ability to meet
 its payment obligations as counterparty under the credit default swap,
 Standard & Poor's said.
 
      RATING LOWERED AND REMOVED FROM CREDITWATCH
      Cathedral Ltd.
      $16.5 Million Floating-Rate Notes Due May 2004
                       To               From
      Class B          BB+              BBB/Watch Neg
 
      RATING PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS
      Cathedral Ltd.
      Eur404 Million Floating-Rate Notes Due May 2004
                       To               From
      Class A          AAA/Watch Neg    AAA
 
      OUTSTANDING RATING AFFIRMED
      Cathedral Ltd.
      $8.5 Million Floating-Rate Notes Due May 2004
      Class C          B
 
 SOURCE  Standard & Poor's Ratings Services