Business Context and Reporting Period
This Form 8-K is filed by STRATS(SM) Trust for Dominion Resources, Inc. Securities, Series 2005-6 (the "Trust"), with Synthetic Fixed-Income Securities, Inc. acting as Sponsor and Depositor. The report date is October 25, 2012, covering events occurring on October 18 and October 25, 2012.
Key Financial Metrics
The filing does not provide specific financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity figures. The document focuses exclusively on a regulatory event regarding credit ratings.
Material Changes
On October 25, 2012, Standard & Poor's Ratings Services withdrew its rating assigned to the Floating Rate Structured Repackaged Asset-Backed Trust Securities (STRATS(SM) Certificates, Series 2005-6). This action followed an update to S&P's rating methodology for repackaged securities announced on October 18, 2012. The withdrawal was triggered by the risk that a redemption of the Certificates combined with a termination of the Swap Agreement could result in payment shortfalls to certificate holders. The filing clarifies that this action does not constitute a termination event under the Certificates or the Swap Agreement and does not affect S&P's ratings of the Underlying Securities or the Swap Counterparty.
Outlook, Risks, and Management Commentary
Management warns that the withdrawal of the rating may have a material adverse effect on the secondary market price and liquidity of the Certificates. The filing highlights the following risks:
- Liquidity Risk: Many institutional investors are required to hold securities with specific ratings; the withdrawal may force these investors to sell their holdings within a limited timeframe.
- Price Volatility: Increased selling pressure could adversely affect the market price of the Certificates.
- Marketability: Prospective sellers may be unable to sell their Certificates at acquisition prices or may be unable to find buyers at any price.
Investor Verification Checklist
- Confirm the current status of the Swap Agreement and whether any termination payments are owed to the Swap Counterparty.
- Verify the current secondary market price and trading volume of the STRATS(SM) Certificates, Series 2005-6.
- Review the specific terms of the Certificates regarding redemption and payment shortfalls to assess exposure.
- Check if the withdrawal of the S&P rating has triggered any internal investment mandates for institutional holders.