Pakistan's only securitization arguably the most stressed-out future flow in the history of securitization is in danger of being downgraded yet again, following the Pakistani army's ouster of Prime Minister Nawaz Sharif last week.

The $250 million issue for state-controlled Pakistan Telecommunications matures in August 2003 and continues to pay out, though Pakistan has teetered on the brink of bankruptcy for over a year. But the latest turn of events does not bode well for the transaction's ratings.

"The current political upheaval on top of the country's worst-ever economic crisis raises much concern. We'll continue the monitor the situation as it unfolds. Due to the strength of the structure, we have reason to believe the transaction will be left out from debt rescheduling. But the current situation could increase the potential risk of disruption," commented Greg Kabance at Duff & Phelps in Hong Kong.

Standard & Poor's also took a guarded approach but said it was too early to say if a downgrade was warranted. "An obligation rated triple-C means that it is currently vulnerable to non-payment, and is dependent upon favorable conditions for the obligor to meet its financial conditions on the obligations," said Henry Albulescu at S&P in New York, adding that the next payment date for the transaction is in mid-November. "We will take appropriate rating action if and when required."

The future flow deal is backed by incoming overseas phone calls. Originally rated triple-B minus by S&P and DCR, the issue has since been downgraded twice by S&P to triple C-plus and to double-B plus by DCR, and remains on negative outlook for both agencies.

It was launched in August 1997 by ABN Amro and Citicorp Securities and sold to U.S. insurance companies.

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