News Release

Fitch Upgrades Six Classes of Carlyle High Yield Partners, L.P.

2003-26pc

NEW YORK-Aug. 26, 2003 – Fitch Ratings upgrades six classes of Carlyle High Yield Partners, L.P. These rating actions are effective immediately.


- $445,000,000 senior secured revolving credit facility to 'AA+' from 'AA';
- $80,000,000 class A first senior secured notes to 'AA+' from 'AA';
- $68,000,000 class B second senior secured notes to 'A+' from 'A';
- $60,000,000 class C senior subordinated secured notes to 'BBB+' from 'BBB';
- $47,000,000 class D subordinated secured notes to 'BB+' from 'BB';
- $35,000,000 class E junior subordinated secured notes to 'B+' from 'B'.


Carlyle High Yield Partners, L.P. is a market value collateral debt obligation (CDO) that closed in May 1999. The fund is managed by the New York High Yield team of The Carlyle Group, a Washington D.C.-based private equity firm. The New York High Yield team was formed in 1998. The credit committee is comprised of senior individuals averaging more than 15 years of related experience. At inception, the investment manager targeted a portfolio of 75% high yield loans and high yield bonds, and 25% of mezzanine investments, private equity and distressed debt, referred to as 'special situation assets'. Carlyle has maintained a consistent management style over the last four years. At the July 30, 2003 valuation date, the fund's collateral mix was 4% in cash and cash equivalents, 73% in high yield loans and high yield bonds, and 23% special situation assets.


The fund is performing well, with the portfolio's net asset value (NAV) rising 45% in aggregate from Jan. 1, 2003 through July 30, 2003. The improvement can be attributed to both improved credit markets, as well as strong investment decisions by the portfolio manager. The portfolio's loan, bond and special situation assets all contributed to the improved NAV. At the beginning of the year, the special situation portfolio realized notable gains due to sales of more mature investments. Although additional gains may be taken on certain special situation assets due to recently updated appraisals, the portfolio manager prefers to remain conservative on the valuations and will not reflect these higher collateral values.


The fund has improved its overcollateralization (OC) cushion from a year ago. As of the July 30, 2002 valuation date, the discounted collateral value of the portfolio covered the revolver and class A notes at 124.1%. At the July 30, 2003 valuation date, the discounted collateral value of the portfolio covered the revolver and class A notes at 156.4%. Similar improvements in coverage were observed at the class B, C, D and E levels as well. At the July 30, 2002 valuation date, the discounted collateral value covered the class B, C, D and E notes at 114.2%, 111.4%, 106.2%, and 103.1%, respectively, which increased to 136.3%, 127.4%, 119.3% and 114.7%, respectively, at the July 30, 2003 valuation date.


Based on the strong performance of the portfolio and the growth in the OC cushion, as well as the experience and consistent management style of the asset manager, Fitch has upgraded the rated liabilities of Carlyle High Yield Partners, L.P.


Fitch originally rated the liabilities of Carlyle High Yield Partners, L.P. on May 20, 1999.


CONTACT: Fitch Ratings, New York Alla Zaydman, 212-908-0542 Elizabeth Russotto, 212-908-0585 Media Relations: Matt Burkhard, 212-908-0540.


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