The Novation Agreement effectively transfers all of the rights and obligations of CFPI as swap counterparty in the fixed/floating interest rate hedge transaction with the Issuer to State Street. Under the novated hedge, State Street will make floating rate payments to the Issuer and receive fixed interest rate payments from the Issuer. The hedge mitigates any difference in interest payments received on fixed-rate assets held by the Issuer and the floating-rate liabilities issued by the Issuer. State Street meets the ratings requirements to serve as hedge counterparty under the provisions of the swap documents.
In assessing the impact of the Novation Agreement on the current Moody's ratings of the Notes, Moody's assessed the credit quality of the new swap counterparty and reviewed the Novation Agreement to determine whether it changed the obligations of the swap counterparty in any respect that could negatively affect the credit quality of the rated securities. Moody's rating view is based primarily on its opinion that State Street is a highly-rated entity and that the Novation Agreement does not diminish the swap counterparty's obligations to the Issuer.
The principal methodology used in reaching its conclusion and in monitoring the ratings of the Notes issued by the Issuer is "Moody's Revises its Methodology for Emerging Market CDOs", published in April 2007 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab.
Other methodologies and factors that may have been considered in the process of rating the Notes issued by the Issuer can also be found in the Rating Methodologies sub-directory on Moody's website.
Stephen Lioce Senior Vice President Structured Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Ramon O. Torres Senior Vice President Structured Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
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