TEXT-S&P: Sandy's impact on US small business deals likely limited
Nov 15 - Standard & Poor's Ratings Services today stated that the impact of Hurricane Sandy will likely have a limited impact on publicly rated U.S. small business loan securitizations. These transactions are asset-backed securitizations backed by payments from small-business loans consisting of both conventional and SBA (Small Business Association) 7(a) small business loans. Standard & Poor's performed a preliminary review of its 44 rated small business transactions to determine which contained loans made to properties located in areas covered by FEMA Major Disaster Declarations. The following is a breakdown of the number of transactions and the percentage of their collateral pool potentially exposed to properties in areas affected by Hurricane Sandy: No. of deals % of prop. in areas affected by storm 24 0% 7 Less than 2% 7 Between 2.01% and 5% 4 Between 5.01% and 10% 2 Between 10.01% and 17.06% We will continue to review the small-business transactions and assess their exposure to properties affected by the storm. Our review will also involve examining each transaction's current available credit enhancement including overcollateralization rate, excess spread, and reserve account balances. In addition, we will consider sensitivity tests assuming different levels of delinquency, default, and recovery for the loans in the affected area and will assess how well the transaction can withstand such stresses. Further, we will review the loan characteristics including lien status (first lien vs. second lien), origination year, size, and diversification of obligors and industry. Standard & Poor's will continue to monitor the small business loan securitizations it rates and take rating actions, including CreditWatch placements, when appropriate. Standard & Poor's, a part of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of credit ratings. With offices in 23 countries, Standard & Poor's is an important part of the world's financial infrastructure and has played a leading role for 150 years in providing investors with information and independent benchmarks for their investment and financial decisions.