TEXT-S&P lowers rtgs in Artesian Finance

Wed Dec 21, 2011 7:53am EST

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OVERVIEW

-- On Nov. 30, we lowered our rating on Assured Guaranty (Europe).

-- Assured Guaranty (Europe) provides an unconditional and irrevocable guarantee to bondholders holding the notes issued by Artesian Finance.

-- The ratings on Artesian Finance's notes reflect the rating on the financial guarantor.

-- As a result, we have also lowered our ratings on Artesian Finance, to reflect the recent downgrade of Assured Guaranty (Europe).

Standard & Poor's Ratings Services today lowered to 'AA- (sf)' from 'AA+ (sf)' and removed from CreditWatch negative its credit ratings on Artesian Finance PLC's GBP473.028 million index-linked guaranteed 3.625% series 1-7 senior secured bonds, issued under its GBP750 million medium-term note program (see list below). This follows our Nov. 30 downgrade of the financial guarantor, Assured Guaranty (Europe) Ltd.

On Nov. 30, we lowered our rating on Assured Guaranty (Europe) to 'AA-' from 'AA+' and removed it from CreditWatch negative, as a result of the application of our updated bond insurance criteria (see "Assured Guaranty Ltd. And Operating Companies Downgraded; Outlook Stable").

Our ratings on Artesian Finance's notes reflect Assured Guaranty (Europe)'s financial guarantee of scheduled payment of principal and interest to bondholders. As such, today's rating actions follow our earlier rating action on Assured Guaranty (Europe).

At the same time, we are recording under the same ISIN code all outstanding tap issuances, as they all rank pari passu and are fully fungible. The existing ratings on the GBP46,363,000 and GBP149,364,000 tap issuances will be recorded in our system as 'NR' (not rated), with only one issue--having an aggregated notional amount of GBP473.028 million--left outstanding in our ratings database.

STANDARD & POOR'S 17G-7 DISCLOSURE REPORT

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011.

If applicable, the Standard & Poor's 17g-7 Disclosure Report included in this credit rating report is available at

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