Credit Logement, the largest French provider of mutual guarantees on residential loans, said it would not exercise the calls on the first callable dates of two of its outstanding series — FRES 2004-2 and FRES 2005-1 series — that will  happen on Dec. 21 and 27, respectively.

Both series are synthetic ABS transactions transferring risk to optimize regulatory capital requirements under Basel I.

In its press release, the company indicated it was still expecting further clarification from the French regulator on the adoption of its internal model and on the end of minimum floor requirements (currently 80% of the Basel I requirements) under the three-year transition period to full Basel II implementation.

At this stage, the company has does not have the exact timing of the final decision, which should occur sometime in 2010, although implementation might not take place until 2011.

This would delay redemption of the notes by one more year, Societe Generale analysts said.


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