Fitch Rates $200MM Twin Reefs Pass-Through Trust Securities 'AA'.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has assigned an 'AA' rating to the $200 million pass-through trust securities of Twin Reefs Pass-Through Trust (the pass-through trust). The pass-through securities Pass-through securities A pool of fixed income securities backed by a package of assets (i.e., mortgages) where the holder receives the principal and interest payments. Related: Mortgage pass-through security provide a perpetual soft capital facility for XL Financial Assurance Ltd. (XLFA, 'AAA' insurer financial strength (IFS) rating; Stable Rating Outlook by Fitch). XLFA is a monoline financial guaranty reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. company that derives the majority of its business by assuming up to 90% of the risk and premium of XL Capital Assurance Inc. (XLCA XLCA Xl Capital Assurance, Inc. , 'AAA' IFS rating; Stable Rating Outlook by Fitch) and, in addition, by assuming exposure from certain other third-party monoline financial guarantors. XLCA is a monoline financial guaranty insurance company that provides financial guaranties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc public finance, asset-backed, single structured risk, and structured investment product obligations. XL Capital Ltd (XL Capital, senior debt 'A'; Stable Rating Outlook by Fitch) indirectly owns 100% of XLCA and 85% of XLFA through its subsidiary XL Insurance (Bermuda) Ltd. (XLI, 'AA' IFS rating; Stable Rating Outlook by Fitch). The pass-through trust securities' rating is based on notching off of XLFA's IFS rating. Typical notching to preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. from an 'AAA' IFS rating is two notches. Additionally, the rating of the pass-through trust securities reflects the high quality of the underlying eligible assets that will be invested in by the pass-through trust. The pass-through trust will issue pass-through trust securities to qualified institutional buyers (144A) who are qualified purchasers under Section 3(c)(7) of the Investment Company Act of 1940 and will use the proceeds to invest in securities issued by Twin Reefs Asset Trust (asset trust), a newly formed, limited purpose statutory trust. The asset trust securities represent an undivided interest undivided interest n. title to real property held by two or more persons without specifying the interests of each party by percentage or description of a portion of the real estate. in asset trust's assets. The proceeds from the sale of the asset trust securities will be used to purchase eligible investments consisting of highly rated commercial paper or U.S. Treasury securities U.S. Treasury securities Interest-bearing obligations if the U.S. government issued by the U.S. Department of the Treasury as a means of borrowing money to meet government expenditures not covered by tax revenues. . Both the asset trust and the pass-through trust are Delaware statutory trusts. The pass-through trust securities have no fixed maturity and are considered perpetual securities. However, XLFA has the right to terminate the facility anytime after five years to refinance the capital facility. On the closing date, the asset trust will also enter into a put option agreement with XLFA under which the asset trust is obligated ob·li·gate tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates 1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force. 2. To cause to be grateful or indebted; oblige. to purchase preferred stock (the series B preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. ) put to it by XLFA. The series B preferred shares will rank, at the time of delivery, senior to the common stock of XLFA and senior to the series A preferred shares of XLFA, the most senior preferred shares of XLFA then issued and outstanding. In the event XLFA exercises the put option in full, the holders of the pass-through trust securities will no longer be entitled to the income from eligible assets but instead will be entitled to dividends, when and if declared on the series B preferred shares. XLFA provides the sole source of cash flows for the payment of dividends on and ultimate payment of the series B preferred shares if issued. XLFA will exercise the put option by delivering a put notice to the trustee no later than five days prior to a monthly distribution date on which it intends to exercise the put option (the settlement date), specifying the amount of series B preferred shares it will put. On the settlement date, XLFA will deliver the shares to asset trust. Asset trust will purchase series B preferred shares in an amount equal to the lesser of the designated amount (amount of shares proposed to be put by XLFA) and the aggregate principal proceeds received upon the maturity of the eligible investments on the settlement date after taking into account all losses on the eligible assets and the satisfaction of all obligations of asset trust due and payable on that date. The series B preferred shares will be redeemable in accordance with their terms, and there is no limit to the number of times that XLFA may exercise the put option, redeem the series B preferred shares from the asset trust, and exercise the put option again. The asset trust will not make any loans and will not incur debt or issue securities other than the asset trust securities. The repayment of both the asset trust securities and the pass-through trust securities is from the income from the eligible assets, amounts received from XLFA under the asset trust expense reimbursement agreement and the put option agreement, and the series B preferred dividends. The Bank of New York The Bank of New York, abbrieviated to BNY, was a global financial services company that existed until its merger with the Mellon Financial Corporation on July 2, 2007.[1] The bank now continues under the new name of The Bank of New York Mellon Corporation. serves as the transaction's trustee, custodian, and investment manager. |
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