Just as the rate of ABS downgrades is beginning to notably decline, the first dealership franchise-backed transaction - the last remnant of a once-thriving sector of the market - has succumbed to the franchise curse. In fact, the issuer, Falcon Financial, is often touted for its emphasis on underwriting to real estate in conjunction with enterprise value. (It should be noted that other players that once were associated with franchise ABS have opted to align themselves to CMBS).

Moody's Investors downgraded seven classes of Falcon series 2003-1 auto dealership franchise-loan ABS last Wednesday, due primarily to the deterioration of a single loan in the pool. The loan, which makes up 6.8% of the total pool, was made to The Dodge of Midlothian automobile dealership, which has since lost floorplan funding from DaimlerChrysler Financial Services N.A. The transaction priced in January 2003 via Goldman Sachs.

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