More than one year after placing 32 classes of auto least ABS on watch for a downgrade (see ASR 5/19/03), only to subsequently reverse course and remove the watch on many securities, Standard & Poor's recently addressed its controversial stance on the risks associated with the Pension Benefit Guaranty Corp. (PBGC) assessing a lien on lease receivables due securitization trusts in bankruptcy.

S&P's stance in the report, issued in August, the rating agency is that it will not treat sponsors rated below AAA' as bankruptcy remote when assigning AAA' ratings on these auto-lease deals. The report used a recent high-profile bankruptcy - US Airways - as an example of the potential damages the PBGC can represent to the underfunded pension plans of any company in bankruptcy.

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