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MINNEAPOLIS -March 7, 2003-The U.S. Bancorp Piper Jaffray Aircraft Finance Research Team recently initiated coverage of the aircraft asset-backed securities (ABS) sector, publishing the "Aircraft ABS Guide." The report is a comprehensive guide for investors during a time of great uncertainty for the sector.
"Over the past 18 months, aircraft ABS investors have endured a downturn of historic proportions with volatile lease rates, declining aircraft valuations and uncertain market conditions," said Joel Denney, director of Fixed Income Research for U.S. Bancorp Piper Jaffray. "Aircraft ABS transactions were structured to handle considerable stress, but no one could have predicted the events that precipitated the downtrodden environment that exists today. We believe this new environment makes the base case assumptions in aircraft ABS prospectuses obsolete, therefore one needs to reassess the ability of the pool of aircraft to generate enough cash flow to pay off the debt associated with it."
The "Aircraft ABS Guide" describes a methodology to look examine transactions in today's environment, and then tests the transactions using a standardized framework. In the report, Denney states that building a model incorporating current lease rates as well as future market lease rates provides investors with the ability to measure the level of risk for each tranche today. This model can also highlight relative value opportunities, as each transaction will perform differently under the same economic stresses. "Our model provides current investors with a market-based approach to assess current holdings and understand risk," said Denney.
For more information regarding the "Aircraft ABS Guide," please contact Joel Denney in the U.S. Bancorp Piper Jaffray Fixed Income Research Group at

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