TEXT-S&P lowers rtgs in Spanish RMBS GC Pastor Hipotecario 5

Despite having increased significantly, the current level of cumulative defaults is still below the interest-deferral triggers for the class B and C notes, as set by the transaction documents (10.0% and 6.7% of the initial balance of the mortgage-backed notes, respectively). The purpose of this trigger is to vary the amounts due under the class B and C of notes toward the repayment of amounts due under the senior notes. In our opinion, interest on the junior classes of notes (classes B and C) is not likely to be postponed within the next 12 months toward the repayment of the most senior class of notes in this transaction.

However, this transaction requires full provisioning for defaulted loans (defined as loans in arrears for more than 18 months), and available excess spread has not been sufficient to fully cover these defaults. Consequently, the reserve fund is now fully depleted, and the balance of the performing assets is lower than the outstanding balance of the mortgage-backed notes. This difference could be reduced by recoveries from the defaulted assets, or to the extent that some of the nonperforming assets become current again. The deterioration of the credit quality of the pool has led to a decrease in the performing balance available and a weakening of the structural features, as the reserve fund is now fully depleted and cannot be used to cure defaults. As a result, the levels of credit enhancement based on performing collateral available to the notes have therefore reduced, and classes C and D are now fully undercollateralized. The level of collateralization for class B is now highly sensitive to any further credit quality deterioration of the underlying pool, and to the level of recoveries on defaulted assets that will be received by the servicer on the underlying collateral.

Several changes in respect of supporting counterparties have occurred since this transaction closed. As of today, Banco Santander and CaixaBank are the counterparties giving support to the transaction. Banco Santander is the bank account provider and CaixaBank is the swap provider. On Feb. 13, 2012, we downgraded CaixaBank to BBB+/Stable/A-2 (see "Spain-Based CaixaBank Downgraded To 'BBB+/A-2' After Sovereign Downgrade; Outlook Stable").

Considering all of the above factors, we have today lowered our ratings on GC Pastor Hipotecario 5's class A2, B, and C notes due to deteriorating collateral performance. At the same time, we have removed the rating on the class A2 notes from CreditWatch negative, and we have also affirmed our 'D (sf)' rating on the class D notes, as no timely payment of interest is taking place in this class of notes.

GC Hipotecario Pastor 5 closed in June 2007 and securitizes a portfolio of mortgages granted to individuals, self-employed individuals, and small and midsize enterprises to buy residential or commercial properties located in Spain. Banco Pastor S.A. originated and currently services the portfolio.

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 here.

RELATED CRITERIA AND RESEARCH

-- European Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, March 14, 2012

-- Spain-Based CaixaBank Downgraded To 'BBB+/A-2' After Sovereign Downgrade; Outlook Stable, Feb. 13, 2012

-- Spain's Ratings Lowered To 'A/A-1'; Outlook Negative, Jan. 13, 2012

-- Request For Comment: Counterparty And Supporting Obligations Methodology And Assumptions--Expanded Framework, Nov. 21, 2011

-- Global Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011

-- Spain's Slowing Economy And Depressed Real Estate Market Prompt Negative Rating Actions On 15 Spanish Banks, Oct. 11, 2011

-- Ratings Lowered In Spanish RMBS Transaction GC Pastor Hipotecario 5 Due To Deteriorating Collateral Performance, May 6, 2011

-- Principles Of Credit Ratings, Feb. 16, 2011

-- Counterparty And Supporting Obligations Update, Jan. 13, 2011

-- Counterparty And Supporting Obligations Methodology And Assumptions, Dec. 6, 2010

-- Methodology And Assumptions: Update To The Cash Flow Criteria For European RMBS Transactions, Jan. 6, 2009

-- Methodology And Assumptions: Update To The Criteria For Rating Spanish Residential Mortgage-Backed Securities, Jan. 6, 2009

-- Cash Flow Criteria for European RMBS Transactions, Nov. 20, 2003

-- Criteria for Rating Spanish Residential Mortgage-Backed Securities, March 1, 2002

RATINGS LIST

Class Rating

To From

GC Pastor Hipotecario 5, Fondo de Titulizacion de Activos

EUR710.5 Million Floating-Rate Mortgage-Backed Notes

Rating Lowered And Removed From CreditWatch Negative

A2 BBB+ (sf) A+ (sf)/Watch Neg

Ratings Lowered

B BB- (sf) BBB- (sf)

C CCC (sf) B (sf)

Rating Affirmed

D D (sf)