Northern Rock's Granite Master Trust breached its non-asset trigger, because the current-seller share fell below the minimum on two consecutive distribution dates. The breach is the result of a strategic decision by Northern Rock's management.

Adding new loans to the trust "was not in the best interest of taxpayers given one of our prime objectives under the current business plan is the repayment of a government loan," a Northern Rock spokesman said. Granite bonds are excluded from governmental support and not guaranteed by the Treasury.

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