S&P Asgns Prelim Rtgs to Lusitano 2's Portuguese ABS

    MADRID, Spain--April 8, 2002--(Standard & Poor's)--Standard & Poor's said today that it assigned its preliminary ratings to the EUR450 million asset-backed floating-rate notes to be issued by Lusitano Finance No. 2 PLC, a special-purpose entity (see list below).
    The notes will be backed by a portfolio of assets comprising receivables from auto and consumer loans and leasing agreements granted to individuals or corporate entities in Portugal. The assets were originated by Banco Espirito Santo S.A. (BES; A-/Stable/A-2), which is selling the consumer loan receivables, and Besleasing Mobiliaria -- Sociedade de Locacao Financeira, S.A. (Besleasing; not rated), which is selling the leasing contract receivables.
    "The transaction cash flows are divided into two parts," said Jose Ramon Tora, a director with Standard & Poor's Structured Finance Ratings group in Madrid. "This is a particularity of most Portuguese securitizations to date. In this case, the principal component of the receivables will be sold to Lusitano Finance No. 2 and backed by principal collections on the receivables and the interest component will be sold to BNP Paribas (Portugal) and backed by the interest collections on the receivables."
    The sale of the interest component to BNP Paribas (Portugal), a domestic bank in Portugal, means that the interest will be exempt from the withholding tax payable on loan interest payments to entities outside of Portugal, he added.
    The preliminary ratings reflect the sound legal structure of the transaction, and the sound payment structure and cash flow mechanics of the transaction. Key considerations in the ratings analysis include the ability of BES and Besleasing to perform their roles as servicers in this transaction, as confirmed by an on-site operational visit by Standard & Poor's, and the hedging arrangements that insulate the issuer from fixed/floating and basis interest rate risks.
    A further key consideration is the level of support for noteholders, provided by a combination of subordination of the junior classes, the reserve fund (4.5% of the notes issued), and excess spread to cover credit losses and income shortfalls.
    A copy of Standard & Poor's complete presale report for this transaction is available on RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. The report is also available on Standard & Poor's Ratings Services Web site at www.standardandpoors.com. Under Presale Reports, select Structured Finance, then Asset-Backed Securities.

PRELIMINARY RATINGS ASSIGNED
Lusitano Finance No. 2 PLC
EUR450 Million Floating-Rate Asset-Backed Notes
Class    Rating   Amount (Mil. EUR)
A        AAA      409.72
B        AA        11.25
C        A-        29.03

    ANALYTICAL E-MAIL ADDRESSES
    jose_tora@standardandpoors.com
    chris_such@standardandpoors.com
    StructuredFinanceEurope@standardandpoors.com

    Copyright 2002, Standard & Poor's Ratings Services