Printer Friendly

GS FINANCIAL PRODUCTS INTERNATIONAL RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --

 GS FINANCIAL PRODUCTS INTERNATIONAL RATED 'AAA' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Aug. 11 /PRNewswire/ -- GS Financial Products International L.P. (GSFP), and the company's 34 billion yen (roughly $266 million) of senior notes, are rated 'AAA' by Fitch. The rating is based on the high credit quality of GSFP counterparties, strict operating guidelines, conservative risk management, and a strong capital base.
 In February 1992, GSFP was created as a limited purpose subsidiary of Goldman Sachs Group to engage in derivative transactions. GSFP purchased initially a portfolio of yen-denominated options on the Nikkei 225 worth roughly $350 million from Goldman Sachs. The portfolio was purchased by issuing approximately $229 million of public debt with maturities ranging from 1995 to 1997 and a capital contribution from Goldman Sachs. All partnership interests in GSFP are owned by subsidiaries of The Goldman Sachs Group, L.P.
 The purpose of establishing a separate legal entity was to isolate and credit enhance specific derivative businesses in order to achieve the highest rating. The current derivatives portfolio consists of yen- denominated Nikkei 225 options. GSFP intends to broaden its range of derivative transactions, but only to the extent that its credit quality does not decline. Fitch has reviewed GSFP's proposal to include yen- denominated interest rate swaps and determined that it would not change the credit quality of the company.
 GSFP manages its portfolio prudently in order to eliminate market risk, such that absent a counterparty default, market changes will not adversely impact cash flow. This is achieved by offsetting each "contract" with a transaction having exact opposite cash flow characteristics. Thus, GSFP's strong capital base of roughly $78 million sufficiently supports its counterparty credit exposure of roughly $490 million. Equity was equal to roughly 16 percent of assets as of July 31, 1992.
 GSFP limits counterparty credit risk by engaging in transactions with only highly rated counterparties. The lowest rated counterparty currently in portfolio is rated 'A' and the average counterparty rating is 'AA'. Also, GSFP's counterparty exposure is restricted under established operating guidelines. The guidelines are based on credit quality and individual obligor concentrations. In addition, GSFP's exposure to Goldman Sachs entities cannot exceed the lower of 15 percent of GSFP's assets or the amount allowable for similarly rated counterparties under current operating guidelines. GSFP takes additional precautions by structuring the portfolio to avoid potential large losses if counterparties default. Fitch does not expect GSFP to deviate significantly from the current credit quality of its counterparties.
 The extent to which GSFP can grow its portfolio is largely dictated by a complex risk model developed by the company under the operating guidelines. The model measures GSFP's ability to absorb default losses and is based on counterparty credit quality, portfolio diversification, liquidity, and market risk. Cash flow is evaluated under a wide variety of market scenarios over the life of the portfolio. The level of credit enhancement is determined by the portfolio characteristics. The risk model incorporates increased credit enhancement for lower rated counterparties, less diversified portfolios, and longer-term contracts. Fitch performed many model tests and believes that GSFP is well capitalized.
 -0- 8/11/92
 /CONTACT: Teri L. Seelig, 212-908-0638, or Stephen W. Joynt, 212-908-0530, both of Fitch/ CO: GS Financial Products International L.P. ST: New York IN: FIN SU: RTG


PS -- NY044 -- 8930 08/11/92 11:45 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Aug 11, 1992
Words:557
Previous Article:CARRIAGE'S CONTINUING OPERATIONS PRODUCE RECORD SALES FOR QUARTER AND YEAR AND SHARPLY HIGHER EARNINGS
Next Article:KENNECOTT COMMITS TO TERYL/CALCO
Topics:


Related Articles
FLEET MORTGAGE REMIC CASH FLOW CERTIFICATES SERIES 1991-3 RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --
HEMET HOUSING AUTHORITY CALIFORNIA HOUSING 'AAA/F-1+' BONDS AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --
HOWARD CO. (MD.) GENERAL OBLIGATION BONDS RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --
PHOENIX IDA COLLATERALIZED LOC HOUSING BONDS LOWERED TO 'A-' BY FITCH -- FITCH FINANCIAL WIRE --
RIVERSIDE COUNTY HOUSING AUTHORITY COLLATERALIZED LETTER OF CREDIT BONDS RAISED TO 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --
SEARS MTGE. SEC. CORP. SERIES 1992-17 RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --
GS FINANCIAL PRODUCTS INTERNATIONAL $1 BILLION EURO MEDIUM TERM NOTES RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --
GS FINANCIAL PRODUCTS U.S. COUNTERPARTY RISK RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --
GS FINANCIAL PRODUCTS U.S. $500 MILLION SENIOR DEBT SHELF RATED 'AAA' BY FITCH -- FITCH FINANCIAL WIRE --
Heller SBA Pass-Through Certificates Series 1998-1, Cl A, X, M-1 Rated by Fitch IBCA - Fitch IBCA -

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters