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Non-Tech : Cityscape Financial (CTYS) -- Ignore unavailable to you. Want to Upgrade?

To: Ploni who wrote (1662)	11/15/1997 8:43:00 PM
From: Rational	Respond to of 2544

Chas: CTYS must have added to the over-collateralization requirement of the trust to compensate for the bad loans. This must be one of the causes for taking a charge of $90 + mil this quarter. [This is approximately equal to the 100 mil non-performing loans they had reported earlier that has gone out to Ocwen. I can now see that this was perhaps brewing underneath while we were in the dark: a threat to cut the trust bond ratings unless CTYS did something.] These ratings protect debtholders. The main question is: what is the residual value allocable to equityholders? I would be very excited if the Cityscape corporate debt rating is increased by any rating agency because that would tell us that the riskiest debtholders will be protected and perhaps equityholders will have some residue. Thus reaffirmation of the ratings of the trust is good news to debtholders and has no new information for equityholders beyond what CTYS has already declated on Friday, IMO. Sankar

To: Ploni who wrote (1662)	11/15/1997 9:03:00 PM
From: Rational	Read Replies (1) \| Respond to of 2544

Charles: I think I now understand why CTYS was falling like crazy: it was (IMO) a serious threat to the TRUST due to the non-performing loans. The management appears (to me) sleazy because they did not say in the CC if they had to increase the over-collateralization requirements to obtain a reaffirmation of the TRUST rating and if the charge was for that purpose. It seems obvious to me now that it was. Big investors did not respond on Friday because in the CC many asked questions about the residual part of the non-performing loans (if any) and CTYS refused to answer. IMHO, the rating affirmation will be misinterpreted by small investors as good news, whereas it has no new information for equityholders. I am staying away. The price fell from the peak of 2 11/32 to 1 3/4 on Friday. Sankar