Fitch Affirms ZARS 2004-1.CHICAGO -- Fitch affirms one note issued by Zero Accrual Receipts, series 2004-1 ('ZARS'). The affirmation is the result of Fitch's review process. The following rating action is effective immediately: --$500,000,000 series 2004-1 affirmed at 'AAA'. ZARS is an investment structured by Lazard Freres & Co. LLC, whereby investors gain exposure to a yield-enhanced, zero-coupon bond Coupon Bond A debt obligation with coupons attached that represent semiannual interest payments.Notes: No record of the purchaser is kept by the issuer, and the purchaser's name is not printed on the certificate.This is also known as a bearer bond. See also: Bearer Form, Bond, Coupon, Interest Rate, Zero Coupon Bond issued by Resolution Funding Corporation Resolution Funding Corporation (RefCorp) A government agency established by Congress in 1989 to issue bailout bonds and raise funds for the activities of the Resolution Trust Corporation, as well as to administer struggling institutions inherited from the disbanded Federal Savings and Loan Corporation. ('RefCorp Zero'). The investors achieve a higher yield than the YTM YTM - Medium Harbor TugYTM - Yhteiskuntatieteiden Maisteri (Finnish: Master of Social Sciences) YTM - Yield to Maturity YTM - You're the Man YTM - Youth for the Third Millennium of an underlying zero-coupon bond Zero-Coupon Bond A debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.Also known as an accrual bond. Notes: Some zero-coupon bonds are issued as such, while others are bonds that have been stripped of their coupons by a financial institution and then repackaged as zero-coupon bonds. by repacking the zero with a short position on a call option. Investors will receive the ZARS securities which will come due on the maturity of the underlying RefCorp Zero in 2020 or upon the exercise of the call option Call Option An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.Notes: It may help you to remember that a call option gives you the right to "call in" (buy) an asset. You profit on a call when the underlying asset increases in price. See also: Call Option, Long, Option, Put by the call option holder Option holder A person who has an option that has not been exercised.. The repackaging of the bond is done through a Depository Agreement whereby U.S. Bank, N.A. ('U.S. Bank') deposited the RefCorp Zero into a trust account for the benefit of the investors in exchange for the investors providing cash in the amount of the value of the RefCorp Zero less the proceeds generated from the short call option written on the RefCorp Zero through the Depository Agreement. This affirmation is based upon U.S. Bank's outstanding 'F1+' short term rating. Fitch believes that the current rating still reflects the risk to the noteholders. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Derivative Fitch web site at www.derivativefitch.com. For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Oct. 4, 2006 and also available on Fitch's web site at www.derivativefitch.com. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.derivativefitch.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. Fitch means Fitch, Inc., Fitch Ratings, Ltd. and their subsidiaries including Derivative Fitch, Inc. and Derivative Fitch Ltd. and any successor or successors thereto. |
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