Fitch Affirms Check Point Charlie At 'F1+'

Business Wire, July 6, 2005

LONDON -- Fitch Ratings, the international rating agency, has today affirmed Check Point Charlie Limited's (and by U.S. co-issuer, Check Point Charlie Inc.) commercial paper (CP) at 'F1 '. This follows the programme changes made to grand-father certain facilities provided by Landesbank Berlin (LBB, un-guaranteed rating 'BBB '/'F2') in anticipation of the removal of state guarantees after 18 July. Check Point Charlie is sponsored by Bankesellschaft Berlin (BGB, un-guaranteed rating 'BBB '/'F2'); LBB is a closely integrated subsidiary of BGB.

Under the grand-fathering arrangement, obligations of LBB entered into on or before the 18 July but maturing before 31 December 2015 will continue to benefit from the state guarantee in the event that LBB is unable to meet its obligations toward the conduit. Thus, the rating of the conduit is still effectively tied to that of the German state of Berlin ('AAA'/'F1 '). Check Point Charlie has entered into a 10-year liquidity agreement and various indemnities that, per the legal opinion received by Fitch, will benefit from such grand-fathering.

Check Point Charlie has implemented an innovative approach to liquidity support. The conduit will benefit from a committed liquidity agreement that will cover 25% of the total asset value. CP maturities on any one day are limited to the Swingline facility amount, and maturities on any three consecutive business days are limited to 25% of outstandings. Thus, the liquidity agreement will always cover at least three days of CP maturities. If this is exhausted, further liquidity will be provided by asset sales, and possibly in the future, also by repurchase agreements (repos). A grand-fathered indemnity is in place that ensures all asset sales will generate at least 80% of the asset's book value (therefore, asset sales in conjunction with the liquidity agreement will cover 105% of the total asset value). If repos are used in future, the discount will be limited such that the proceeds generated will always be at least 80% of the asset's book value. The purchasing company and issuer level administration agreements have been modified to enable this new liquidity structure, for instance, by detailing the steps to be taken by the administrator to ensure that any asset sales or repos are transacted in sufficient time to ensure the proceeds generated are available to repay CP maturities as they fall due. It is important to note that as under the previous structure, liquidity is not available if the advance exceeds the commitment upon insolvency of the borrower and liquidity cannot be drawn against defaulted assets.

Check Point Charlie Limited (Jersey) and co-issuer Check Point Charlie Inc. (Delaware) are bankruptcy remote special purpose vehicles whose primary purpose is the issuance of USD denominated CP. The proceeds are used to make to make loans to four portfolio purchasing companies (PPCs). Such proceeds received by each PPC are invested in highly rated asset-backed securities that meet the programme's eligibility criteria.

Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies and relevant policies and procedures are also available on this site, at all times. This document will remain on the public site for seven days.