Issuer: HSH LBBW Prime 2006-1 Funding Limited Partnership

....EUR119.6M A Notes, Ba1 (sf) Placed Under Review for Possible Downgrade; previously on Nov 29, 2011 Downgraded to Ba1 (sf)

....EUR15M B Notes, Caa1 (sf) Placed Under Review for Possible Downgrade; previously on Nov 29, 2011 Downgraded to Caa1 (sf)

Prime 2006-1 Funding Limited Partnership is a German SME CLO backed by profit participation agreements ("Genussrechte") with or without loss participations which are all subordinated bullet loans issued by German small and medium-sized companies.

RATINGS RATIONALE

Today's rating actions are driven by the recent credit deterioration observed in the underlying pool. This deterioration is evidenced by increased defaults and the consequential reduction of the overcollateralization ("OC") levels. Moody's also notes that the transaction is exposed to high jump to default risk, due to portfolio non granularity. The four largest obligors, each with EUR 15M exposure, comprise 48% of the performing par. Moody's calculates the performing par of the current portfolio as EUR 124M, excluding issuers that have defaulted, insolvent or are close to default.

Moody's expects to conclude this review when the new manager 2012 annual report is received and analysed by the end of the calendar year.

Moody's notes that this transaction is subject to a high level of macroeconomic uncertainty, as evidenced by uncertainties of credit conditions in the general economy, especially as all obligors are concentrated in Germany.

The methodologies used in this rating were "Moody's Approach to Rating CDOs of SMEs in Europe" published in February 2007, and "Moody's Approach to Rating Collateralized Loan Obligations" published in June 2011. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

No cash flow analysis, sensitivity or stress scenarios have been conducted as the decision to place these ratings under review for possible downgrade was derived from the observed credit deterioration of the underlying pool.

In addition to the quantitative factors, qualitative factors are part of the rating committee considerations. These qualitative factors include the structural protections in each transaction, the recent deal performance in the current market environment, the legal environment, specific documentation features, and the potential for selection bias in the portfolio. All information available to rating committees, including macroeconomic forecasts, input from other Moody's analytical groups, market factors, and judgments regarding the nature and severity of credit stress on the transactions, may influence the final rating decision.

On 21 August 2012, Moody's released a Request for Comment seeking market feedback on proposed adjustments to its modelling assumptions. These adjustments are designed to account for the impact of rapid and significant country credit deterioration on structured finance transactions. If the adjusted approach is implemented as proposed, the rating of the notes affected by today rating action may be negatively affected. See "Approach to Assessing the Impact of a Rapid Country Credit Deterioration on Structured Finance Transactions", (http://www.moodys.com/research/Approach-to-Assessing-the-Impact-of-a-Rapid-Country-Credit--PBS_SF294880) for further details regarding the implications of the proposed methodology changes on Moody's ratings.

REGULATORY DISCLOSURES

The ratings have been disclosed to the rated entities or their designated agent(s) and issued with no amendment resulting from that disclosure.

Information sources used to prepare each of the ratings are the following: parties involved in the ratings, parties not involved in the ratings and public information.

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments related to the monitoring of these transactions in the past six months.

Moody's considers the quality of information available on the rated entities, obligations or credits satisfactory for the purposes of issuing these reviews.

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Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entities or their related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.

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Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

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Angela Jung Analyst Structured Finance Group Moody'sInvestors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Neelam S. Desai Senior Vice President Structured Finance Group JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 Releasing Office: Moody's Investors Service Ltd. One Canada SquareCanary WharfLondon E14 5FA United Kingdom JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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