BNY Asset Solutions recently sparked a deal with franchise and commercial lender Captec Financial Group, to assume the role of master servicer on approximately $550 million worth of loans to about 1,000 restaurants and convenience stores.

The loans have been securitized by three outstanding trusts: Captec Franchise Loan Trust 2000-1, Captec Franchise Loan Trust 1999-1, and Franchise Loan Trust 1998-1.

BNY will be responsible for servicing advances, and will oversee workouts. Captec will continue to with most of the day-to-day servicing, according to officials at BNY.

"I think that Captec wanted to enhance the structure of the deals and the trust, and they wanted someone with the Bank of New York's credit worthiness and expertise," said Stuart Miles, chief operating office at BNY.

Several of Captec's deals have been downgraded by both Moody's Investors Service and Fitch over the last few months, including FLT 1998-1, which is included in the BNY transaction. That deal is a joint securitization of franchise loans originated by Captec and Convenience Store Finance Company. Most recently, Moody's knocked the three A-classes (A1, A2, A3) to Aa2' from Aaa', the B-class to A2' from Aa2', the C-class to Baa3' from A2', the D-class to Ba3' from Baa2', the E-class to Ca' from Ba2', and the F-class to C' from B2', citing low expected recoveries from the largest delinquent borrower, Griffin Express.

BNY Asset Solutions services $15 billion worth of ABS, CMBS and CLO collateral. The company has also serviced loans for Falcon Franchise, which makes loans to car dealerships. According to BNY, with the addition of the Captec loans to its portfolio, it services close to 10% of the securitized franchise market.

EMAC and FMAC

Elsewhere in the franchise world, the rating agencies took their latest round of action on trusts from Enterprise Mortgage Acceptance Co. and Franchise Mortgage Acceptance Corp.

Notably, both Moody's and Fitch lowered all classes, including the triple-As, on EMAC 1999-1, at least one notch. Fitch, which also rated EMAC 1998-1, took similar action on that trust.

The EMAC downgrades reflect loss of credit enhancement from principal write-downs, the largest of which on a loan to Convenience USA (1999 pool), making up approximately 18% of that deal.

Fitch also downgraded the C-class of FMAC 1997-C (BBB-' to BB+') and three classes from the 1998-A deal, including the class-A (AAA' to AA').

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