The U.S. Debt Ceiling Standoff: How It Could Affect Structured Finance

On July 15, 2011, Standard & Poor's placed its ratings for certain structured finance transactions on CreditWatch negative due to their exposure to the sovereign rating on the United States of America. The resolution of these CreditWatch placements will depend, in part, on whether the U.S. sovereign rating changes and, if so, the degree to which each structured finance transaction's payments might, in our opinion, be affected by the change.
Gary Kochubka, senior director in Standard & Poor' ABS Ratings group, and Ted Burbage, head of U.S. Investor Relations, discuss the impact of three hypothetical scenarios following the possible lowering of the U.S. sovereign rating.