TEXT-Fitch rates Jefferies' Station Place 2013-1 notes 'BBB'
Feb 21 - Fitch Ratings has assigned a rating of 'BBB' to $60 million of senior secured notes (Notes) issued by Station Place Securitization Trust, Series 2013-1 (Trust) maturing in 2015. The notes have been placed on Rating Watch Negative. Jefferies Mortgage Funding, LLC (JMFL), a wholly-owned subsidiary of Jefferies Group, Inc. (Jefferies, rated 'BBB'; Rating Watch Negative' by Fitch), will periodically sell mortgage assets to, and repurchase the same assets, from the Trust pursuant to a master repurchase agreement. Jefferies has provided a full and unconditional guarantee of JMFL's payment obligations to the Trust under the repurchase agreement. The Trust has issued the Notes, which are secured by the repo assets as well as its rights under the repurchase agreement. The Trust's payment obligations on the Notes are not directly guaranteed by Jefferies. RATING ACTION RATIONALE The rating on the Notes is based entirely on the ratings of Jefferies. Fitch has given no consideration to any collateral provided, as Fitch has not evaluated, nor does it expect to review, the collateral policy or collateral assets backing the Notes. Because Jefferies has fully and unconditionally guaranteed the due and punctual payment of all obligations of JMFL to the Trust under the repurchase agreement, it is Fitch's view that the Notes rank pari passu with senior, unsecured obligations of Jefferies. RATING DRIVERS AND SENSITIVITIES Jefferies' ratings were placed on Rating Watch Negative on Nov. 12, 2012 in connection with the company's planned merger with Leucadia National Corp. (Leucadia). Fitch expects to downgrade Jefferies' ratings by one notch upon consummation of the merger. This reflects Fitch's view that after the proposed merger, Jefferies would become much more exposed to the market risk inherent in the other subsidiaries' investments at Leucadia. Conversely, becoming a privately-owned company may help insulate Jefferies from external market pressures similar to those experienced in November 2011 For more information, please see the press release titled 'Fitch Places Jefferies' 'BBB' L-T IDR on Rating Watch Negative on Proposed Merger with Leucadia,' available at www.fitchratings.com. Jefferies, a Delaware-incorporated holding company, is a well-established full-service investment bank and institutional securities firm primarily serving middle-market clients and investors. Its primary broker/dealer operating subsidiary, Jefferies & Company, Inc., holds the vast majority of the firm's consolidated assets and is regulated by the SEC. At Nov. 30, 2012, Jefferies had U.S. GAAP total assets of $36.3 billion and shareholders' equity of $3.4 billion (including non-controlling interests). Fitch has assigned the following rating: Station Place Securitization Trust, Series 2013-1 --$60 million senior secured notes maturing 2015 'BBB'; Rating Watch Negative. Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable Criteria and Related Research: --'Global Financial Institutions Rating Criteria' (Aug. 15, 2012); --'Securities Firms Criteria' (Aug. 15, 2012). Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria Securities Firms Criteria
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