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BDT 250.00 million Class-A Senior Tranche ……… AAA
BDT 25.00 million Class-B Subordinate Tranche ...…… AA1

Date of Rating: 27 August 2007

Validity: 6 month

Mohammed Tajul Islam
Senior Financial Analyst


CRAB assigned preliminary ratings of AAA to BDT 250.0 million Class A Senior
Tranche and AA1 to BDT 25.0 million Class B Subordinated Tranche on 21 March
2007. The preliminary ratings as indicated above constitute the securitization of lease
receivables originated by IDLC, a leading non-bank financial institution. The credit-
linked securities are backed by the collateral (IDLC’s earmarked portfolio), which
would be purchased at closing by IDLC Securitization Trust 2007-A, with the proceeds
from the issuance of the above mentioned securities. The Issuer is a Special Purpose
Vehicle (SPV), registered in Bangladesh as Trust. The outstanding principal of the
underlying pool, repayable in quarterly installments after 12 months of issuance of
security and matures at the end of 48 month, whereas the final maturity of the
underlying pool was 58 months from the issue date. The investors hold an undivided
beneficial interest in the underlying assets and receivables. The rating of the
securities was directly linked to the rating of the underlying pool as well as the
transaction structure.

Initially, the structure was framed in such way that investors to the security would
get coupon plus predefined principal redemption. The originator now would like to
restructure the transaction where the issuer (SPV) would issue zero coupon bond
therefore there would no coupon payment to the investors. The issuer would now
redeem the bond at face value (annual discount rate 7.75%). Considering the tax
benefit, the effective annual rate of interest for the investors would be 14.09%.

CRAB analysis looks into the structural changes of the transaction and its effect on
the cash flow and ultimately default probability and credit enhancement level. The
revised rating captures the changes and its subsequent effect on ratings. This report
is a supplementary to the RATING REPORT dated 21 March 2007, which is placed at


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Strengths of the Transaction

The ratings assigned against each class issued by IDLC Securitization Trust 2007-A is
based on the following:

· The underlying lease receivables are well seasoned. The credit quality of the
reference portfolio of IDLC, whose credit performance has a direct impact on
the repayment to the bondholders.
· Credit enhancement in the form of over-collateralization of BDT 29.68 million
to the Senior Class Bond (initial senior bond size is BDT 250.00 million
whereas total assignment of collateral at the beginning of the transaction is
BDT 279.68 million which constitutes over-collateralization of 11.87%).
However, initial pool size i.e. BDT 279.68 million is 1.017 times higher than
Class-A and Class-B notes of BDT 275.0 million.
· Cash Reserve in the trust account at the beginning of the transaction to the
tune of BDT 6.18 million.
· Retention provision of excess spread as credit enhancement.
· Reinvestment provisions of Trust assets by the Trust.
· Senior-Subordinated Structure protects the interest of senior bondholders and
is a form of credit enhancement to the senior bondholders.
· Substitution/Replacement eligibility criteria to swap delinquent and
prepayment loans.
· The ability of IDLC to underwrite and service its lease finance loans.
· Strong payment structure of the transaction. As of July 2007 no single
payment is overdue by the pool obligors. The pool constitutes with 11 obligors
and the loans are originated at different time and with different maturity. As of
July 2007, average 24.0% of pool receivables are collected and on time
payment history indicates the good quality of underlying assets.
· Undertaking by the servicer to provide servicer advance in case of delay in
collection to redeem the bonds at stipulated time.
· The undertaking of Investment Corporation of Bangladesh (ICB) as a Trustee
to pay all the expenses of the Trust other than interest on the securities and
the incorporation of appropriated cash collateralization/ substitution triggers.
· The bankruptcy remoteness of the Issuer.
· Trapping of prepayment risk through creating Provisional Account from where
pre determined obligation of the Trust would be met.

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