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

To: Ploni who wrote (1665)	11/15/1997 10:50:00 PM
From: Rational	Read Replies (2) \| Respond to of 2544

Charles: My background is both engineering and finance. So let me try once more. The collateral in Trust must be sufficient, depending on the quality of loans, to obtain Trust Debt rating as AAA. The residual interest in the trust is divided between debtholders and equityholders of the parent CTYS. If the loan pool in the trust stops performing (i.e., payments are not received as scheduled from borrowers), CTYS is forced to infuse funds as over-collateralization to the trust to get AAA rating for Trust debt. CTYS is supposed to get residual profits from the trust to be allocated between the CTYS corporate debt and equity holders. But, if CTYS is forced to infuse more into the trust to continue to have Trust Debt ratings as AAA, then Corporate debt abd equity holders lose. CTYS did not say if they had to increase the collateral in the trust to get a reaffirmation of AAA ratings (but it is obvious to me that they did). Also, in a press release, it says: Cityscape said it will seek to sell for cash its U.S. home equity residual interests. I think they are trying their best to meet debt obligations. There is no write-off yet of bad loans in the UK. They are continuing to review their UK operations. The press releases give me a feeling that they may close UK and take more losses. Then, they will have a clean slate with no tangible equity, IMHO. But, due to their franchise value, they are very likely to resurrect from a near death, IMHO. Sankar