TEXT-S&P: Sandy's impact on US small business deals likely limited

Thu Nov 15, 2012 12:19pm EST

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.
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