S&P Places Aircraft Deal EAST's A Notes on Watch Neg.

Business Editors

LONDON--(BUSINESS WIRE)--Standard & Poor's

Jan. 30, 2002-- Standard & Poor's today placed its 'AA' rating on Embarcadero Aircraft Securitization Trust's (EAST) series 2000-1 class A-1 and A-2 notes on CreditWatch with negative implications.

The placement of the class A notes on CreditWatch negative reflects the potential increased risk to the class A noteholders resulting from deteriorating cash flow due to a high level of aircraft that are off lease and, for those aircraft that remain on lease, lower rentals resulting from lease renegotiation.

Prior rating action on EAST omitted the class A notes due to its priority within the transaction capital structure and the resulting level of credit and liquidity support. While liquidity remains ample at $24.5 million in cash reserves, the continued difficulty in the operating lease market and the impact of several airline insolvencies and liquidations on the EAST portfolio -- which resulted in a higher than expected aircraft-on-ground level -- may begin to erode liquidity and credit protection to levels not consistent with a 'AA' rating.

The ratings on this transaction and the CreditWatch situation will continue to be closely monitored.

Previous press releases concerning the EAST transaction can be found on RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com.