Carol:  I'm glad you've identified these specific line items.  I think credit 
should have a "separate worksheet" and make a determination for each question 
you've listed.  For exampe, I think the GP should be a Specified Entity.  One 
issue I've experienced with credit is the existence of several LPs in a given 
structure, only one of which owns any operating assets, and there are no 
financials for that LP, but only financials on a consolidated basis at a 
different level.  How does credit identify the counterparty, much less 
determine if that counterparty is an ESP?

I also wonder how many partnerships we have agreements with which may be 
inadequate.  And, when credit approves omnibus Transactions with a 
partnership, is it making a sufficient analysis?  A separate list would help 
in the evaluation.

Are we going to have another credit lunch?  Hope all is going well.  Sara   




Carol St Clair
02/28/2000 12:11 PM
To: Marie Heard/HOU/ECT@ECT, Susan Flynn/HOU/ECT@ECT, Susan 
Bailey/HOU/ECT@ECT, Tana Jones/HOU/ECT@ECT
cc: Sara Shackleton/HOU/ECT@ECT, Shari Stack/HOU/ECT@ECT, Mark 
Taylor/HOU/ECT@ECT 
Subject: Counterparties that are LP's

Although we didn't get to discuss this at our credit luncheon, particularly 
we some of the less-experienced credit folks, when we receive a worksheet 
from them where the counterparty is a limited partnership, it may be 
advisable to ask them the following questions:

1. Should the GP be designated as a Specified Entity?  The alternative may be 
to require the GP to sign a Guaranty and then they would become a credit 
support provider.  By making the GP a Specified Entity, they get picked up in 
the cross default, bankruptcy and credit event upon merger provisions.

2. Should there be an additional termination event or event of default that 
gets triggered if the GP fails to be the GP of the limited partnership?

3. Whose financials are they expecting to receive, the GP's or the LP's?

4. If there are financial tests, who do they pertain to, the GP or the LP?

5. How does the LP qualify as an ESP?  Particularly with some of the less 
experienced credit folks who have not had to deal with this issue on the 
physical side, maybe this question should always be asked for every 
counterparty just to be safe.

Let me know what you think.

Carol