The troubles surrounding Life Co., a Japanese consumer credit company that has filed for protection from its creditors, is unlikely to affect its only asset-backed issue, a transaction called Freya Funding Corp.

The deal, which was launched in March 1999 and worth $216 million, had its ratings affirmed by Standard & Poor's even as it entered the corporate restructuring process.

Freya Funding was rated AAA and wrapped by Financial Security Assurance, but S&P doesn't think that FSA's resources will be called on, as the "underlying structure and the credit support continue to be enhanced to triple-A level." The agency added that as of May 2000, the notes had an outstanding balance of $50.9 million, having redeemed 74% of the initial outstanding amount.

"We will monitor the situation very closely and if we find something happening that looks to be a problem, we'll take a rating action, but we just don't see that happening," said Yu-Tsung Chang, S&P's managing director in Tokyo.

Chang also thinks it unlikely that the back-up servicer, Chase Trust Bank, will need to be called on, as even though Life Co. has entered the corporate reorganization process it has not yet been declared bankrupt and the preservation trustee has assured parties to the deal that money will continue to be transferred from Life Co. to the SPV.

Life Co.'s troubles are also unlikely to affect a recent privately placed residential mortgage deal issued by Life Housing, a company in which Life Co. has a 19% equity stake. The other major shareholder in Life Housing is a subsidiary of Long Term Credit Bank of Japan.

That deal, which was worth 11 billion ($103 million) and closed in April, is also rated AAA by S&P. The agency believes that Life Co.'s position as a minority shareholder will have little or no impact on the transaction.

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