Fitch Affirms 7 Classes of Emporia Preferred Funding III, Ltd./LLC

Business Wire, July 15, 2008

NEW YORK -- Fitch affirms seven classes of notes issued by Emporia Preferred Funding III, Ltd./LLC., (Emporia III). The following rating actions are effective immediately:

--$100,000,000 class A-1 notes affirmed at 'AAA';

--$40,000,000 class A-2 notes affirmed at 'AAA';

--$132,580,000 class A-3 notes affirmed at 'AAA';

--$26,845,000 class B notes affirmed at 'AA';

--$37,170,000 class C notes affirmed at 'A';

--$20,650,000 class D notes affirmed at 'BBB';

--$18,585,000 class E notes affirmed at 'BB'.

Emporia III is a collateralized loan obligation (CLO) that closed March 15, 2007 and is managed by Emporia Capital Management, LLC. Emporia III has a revolving portfolio of middle market loans. The revolving period is scheduled to end in April 2013.

The notes are affirmed as the portfolio has performed within Fitch's expectations since the closing date. Approximately 18.9% of the collateral is publicly rated by at least one agency, with 1.9% of the assets currently on rating watch negative by at least one agency, and an additional 5.8% on outlook negative. When factoring in Fitch's shadow ratings performed on the remainder of the portfolio, the average collateral credit quality is 'B-' which remains within the transaction covenant of 'B-/CCC+' factored in Fitch's analysis at transaction close. As of the latest trustee report dated June 2, 2008 there were no defaulted assets in the portfolio. Additionally, all overcollateralization (OC) and interest coverage (IC) tests were passing their minimum required levels as of the latest trustee report, and all coverage tests have increased since the transaction closed.

Approximately 87.5% of the loans in Emporia III's portfolio are senior secured loans, with the other 12.5% being second lien loans. The top three industry concentrations in Emporia III's portfolio are business services (11.3%), food, beverage, and tobacco (11.1%), and healthcare (10.3%). The largest 5 obligors in the portfolio represent roughly 6.5% of the collateral balance. The single largest obligor represents 1.4% of the collateral pool.

The ratings of the class A-1 notes, class A-2 notes, class A-3 notes, and class B notes address the likelihood that investors will receive full and timely payments of interest, as per the transaction's governing documents, as well as the stated balance of principal by the stated maturity date. The ratings of the class C, class D, and class E notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the transaction's governing documents, as well as the stated balance of principal by the stated maturity date.

Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at www.fitchratings.com.

Fitch released its updated criteria on April 30, 2008 for Corporate CDOs and, at that time, noted it would be reviewing its ratings accordingly to establish consistency for existing and new transactions. As part of this review, Fitch makes standard adjustments for any names on RWN or Negative Outlook, reducing such ratings for default analysis purposes by two and one notch, respectively. Credit committees are also reviewing transactions that are least impacted by the new criteria and/or portfolio migration.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.