S&P Lwrs Rtg on Cl A-2,A-3 of BEA CBO 1998-1;A-1 Afmd.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 26, 2002

Standard & Poor's Ratings Services today lowered its ratings on the class A-2A, A-2B, and A-3 notes issued by BEA CBO 1998-1 Ltd. and co-issued by BEA CBO 1998-1 (Delaware) Corp., and removed them from CreditWatch with negative implications, where they were placed on May 1, 2002.

At the same time, the triple-'A' rating on the class A-1 notes is affirmed based on the significant level of overcollateralization available to support this tranche (see list).

The lowered ratings on the class A-2 and A-3 notes reflect factors that have negatively affected the credit enhancement available to support the notes since the ratings were previously lowered in December 2001. These factors include continuing par erosion of the collateral pool securing the rated notes and a negative migration in the credit quality of the performing assets within the pool.

According to the September 2002 trustee report, the class A overcollateralization ratio is 95.08% versus the required minimum of 119%, and versus a ratio of 102.51% at the time of the December rating action. The ratio has been out of compliance since November 2000. The current performing pool has an aggregate par value of $223.65 million, compared to the effective date required portfolio collateral amount of $350 million. In contrast, only $49.89 million of the principal amount of the liabilities has been paid down since the transaction's inception. Moreover, a total of $75.48 million, or approximately 25.23% of the total collateral pool, is in default.

In addition, the credit quality of the collateral pool has deteriorated since the previous rating action. The transaction is currently failing three out of four categories in Standard & Poor's issuer rating distribution test. According to the Sept. 2, 2002 trustee report, 25.86% of the assets in the collateral pool come from obligors rated single-'B'-plus and higher (versus the minimum required 35%), 38.29% of the assets in the collateral pool come from obligors rated single-'B' and higher (versus the minimum required 75%), and 49.64% of the assets in the collateral pool come from obligors rated single-'B'-minus and higher (versus the minimum required 95%). Furthermore, approximately 5.6% of the performing obligors in the collateral pool currently have ratings that are on CreditWatch with negative implications.

As a part of its analysis, Standard & Poor's reviewed the results of recent cash flow model runs. These runs stressed various parameters that are instrumental in the performance of this transaction, and are used to determine its ability to withstand various levels of default. When the stressed performance of the transaction was then compared to the projected default performance of the current collateral pool, Standard & Poor's found that the projected performance of the class A-2 and A-3 notes, given the current quality of the collateral pool, was not consistent with that at the time of the prior ratings. Consequently, Standard & Poor's has lowered its ratings on these notes to their new levels. Standard & Poor's will continue to monitor the performance of the transaction to ensure that the ratings assigned to the notes remain consistent with the levels of credit enhancement available.

RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE

BEA CBO 1998-1 Ltd./BEA CBO 1998-1 Corp.

                Rating
Class         To      From              Current Balance (Mil. $)
A-2A          B      BBB+/Watch Neg          182.15
A-2B          B      BBB+/Watch Neg           31.84
A-3           CC     BB+/Watch Neg            26.00

RATING AFFIRMED

BEA CBO 1998-1 Ltd./BEA CBO 1998-1 Corp.

Class           Rating                  Current Balance (Mil. $)
A-1             AAA                             7.10

Copyright 2002, Standard & Poor's Ratings Services