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

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 5, 2002

Standard & Poor's Ratings Services today lowered its rating on the class A-3 notes issued by BEA CBO 1998-2 Ltd. and co-issued by BEA CBO 1998-2 (Delaware) Corp. to triple-'C'-minus from single-'B'-plus and removed it from CreditWatch with negative implications, where it was placed on May 2, 2002.

In addition, the triple-'A' ratings on the class A-1L, A-1, and A-2 notes are affirmed based on a financial guarantee insurance policy issued by Financial Security Assurance Inc. (see list).

The lowered rating on the class A-3 notes reflects factors that have negatively affected the credit enhancement available to support the notes since the ratings were last 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 Aug. 2, 2002 trustee report, the class A overcollateralization ratio is 98.05% versus the required minimum of 115%, and versus a ratio of 105.95% at the time of the December rating action. The ratio has been out of compliance since December 2000. The current performing pool has an aggregate par value of $191.5 million, compared to the effective date required portfolio collateral amount of $300 million. In contrast, only $34.02 million of the principal amount of the liability has been paid down due to the special redemption since the transaction's inception. Moreover, a total of $59.55 million, or approximately 23.71% 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 Aug. 2, 2002 trustee report, 30.58% of the assets in the collateral pool come from obligors rated single-'B'-plus and higher (versus the minimum required 35%), 43.23% of the assets in the collateral pool come from obligors rated single-'B' and higher (versus the minimum required 75%), and 56.44% of the assets in the collateral pool come from obligors rated single-'B'-minus and higher (versus the minimum required 95%). Furthermore, approximately 5.25% of the obligors in the performing collateral pool currently have ratings 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-3 notes, given the current quality of the collateral pool, was not consistent with its prior rating. Consequently, Standard & Poor's has lowered its rating on these notes to the new level. Standard & Poor's will continue to monitor its ratings on the class A-1L, A-1, A-2, and A-3 notes.

RATING LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE

    BEA CBO 1998-2 Ltd./BEA CBO 1998-2 Corp.

              Rating
Class      To        From             Current Balance (Mil. $)
A-3        CCC-      B+/Watch Neg     20

RATINGS AFFIRMED

    BEA CBO 1998-2 Ltd./BEA CBO 1998-2 Corp.

Class      Rating       Current Balance (Mil. $)
A-1L       AAA          20.97
A-1        AAA          71
A-2        AAA          100

Copyright 2002, Standard & Poor's Ratings Services