Last Updated: June 1, 2012

Eligible Deposit Accounts and Investment Instruments
1. Eligible Deposit Accounts
Funds collected by a servicer from debtors are remitted to a deposit account in the name of an SPC,
and then are distributed as principal and interest payments to investors and other necessary expenses,
after being held in the account for a short time of period. As the collected money temporarily held in theaccount is subject to the credit risk of the bank at which the account was opened, JCR has establishedcriteria for an eligible deposit account1, which are in principle linked to bank ratings as shown below, inrating securitization products.
■ Criteria for Eligible Deposit Account by Rating on Securitization Product[Long-term Securitization Products (over 1 year)]
Rating on Securitization ProductEligible Deposit
2Account“AAA” to “A-““BBB+” to “BBB-“(Short-term Senior Debts Rating)“J-1” and Over“J-2” and Over(Long-term Senior Debts Rating)“A-“ and Over“BBB-“ and Over

[Short-term Securitization Products (within 1 year)]
Rating on Securitization Product“J-1+” to “J-1““J-2“Eligible Deposit(Short-term Senior Debts Rating)“J-1” and Over“J-2” and OverAccount(Long-term Senior Debts Rating)“A-“ and Over“BBB-“ and Over

(Note) Generally, it is required that if the rating on the bank, at which the account was opened, falls
to a lower level during the securitization period, the collected money is transferred to a newbank account that meets the criteria for an eligible deposit account, within a certain period of
time3 from the day on which the downgrading is made public.
2. Eligible Investment Instruments
The period of the funds remaining at an SPC may be relatively long, depending on securitization
products, as in the case of cash reserve put aside for a long period of time at the SPC. In such a case, suchfunds are often invested in financial instruments for efficient use of the funds. JCR has also establishedcriteria for such investment instruments as set out below.

1

JCR may approve deposit accounts at banks not formally rated by JCR as eligible.
In cases where there is no short-term rating given to the bank at which the account was opened, JCR uses long-termrating.
3
In many cases, this period usually is within 10 business days or within a month (JCR requests within a month inprinciple).
2

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■ Eligible Investment Instruments
Investment

Government bonds, Government-guaranteed bonds,

Products

CP, Deposits, Bank accounts of trust banks (Refer to the Criteria below),
Unsecured call, Government bond Repo4, CP Repo (Refer to the Criteria below).

PeriodIn principle, investments which mature or can be cancelled before maturity on or
before the day 4 business days before the calculation date, or which can bewithdrawn at any time (such investments that mature on or before the day 2 businessdays before the calculation date can be accepted exceptionally, depending on
capability of the financial institutions in cash management).

Currency

Currencies used for principal and interest payments of securitization products.

OtherInvestments that do not fall below par (Investments with a risk of incurring loss fromredemption such as bonds issued over par are also disapproved).

■ Criteria for Eligible Investment Instruments by Rating on Securitization Product[Long-term Securitization Products (over 1 year)]
Rating on Securitization ProductEligible Investment
Instruments

5“AAA” to “A-““BBB+” to “BBB-“(Short-term Senior Debts Rating)“J-1” and Over“J-2” and Over(Long-term Senior Debts Rating)“A-“ and Over“BBB-“ and Over

“J-1+” to “J-1““J-2“[Short-term Securitization Products (within 1 year)]
Rating on Securitization ProductEligible Investment(Short-term Senior Debts Rating)“J-1” and Over“J-2” and Over

Instruments(Long-term Senior Debts Rating)“A-“ and Over“BBB-“ and Over(Note) In principle, it is required that if the rating on the eligible investment instruments falls to alower level during the securitization period, the investments are replaced with other eligible
investment instruments within a month after the announcement of the downgrading or rating
withdrawal.

4

The repo transactions are limited to such transactions in which resale price (the with-coupon price in which unit saleprice includes the accrued interest) is not below the original purchase price (the with-coupon price in which unit saleprice includes the accrued interest). In the case of purchase under an agreement to resell, the counterparty shall meet
JCR’s criteria for eligible investment instruments.
5In cases where there is no short-term rating given to the investment instrument, JCR uses long-term rating.
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Because of the possibility of human or mechanical error as well as other factors in the information herein, JCR makes no representation orwarranty, express or implied, as to accuracy, results, adequacy, timeliness, completeness or merchantability, or fitness for any particular purpose,with respect to any such information, and is not responsible for any errors or omissions, or for results obtained from the use of such information.
Under no circumstances will JCR be liable for any special, indirect, incidental or consequential damages of any kind caused by the use of any suchinformation, including but not limited to, lost opportunity or lost money, whether in contract, tort, strict liability or otherwise, and whether suchdamages are foreseeable or unforeseeable. Information herein is statements of opinion, and not statements of fact as to credit risk decisions orrecommendations regarding decisions to purchase, sell or hold any securities such as individual bonds or commercial paper. JCR retains all rights
pertaining to this document. Any reproduction, adaptation, alteration, etc. of this document, is prohibited, whether or not wholly or partly, without
prior consent of JCR.

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza,
Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026

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