ALBA 2007 – 1 plc - Irish Stock Exchange

Loans to the extent they accrue a fixed rate of interest) in the Mortgage Pool (as more particularly
described under "Credit Structure – Swap Agreements").
In order to hedge the interest rate risk arising by virtue of the difference between the fixed rates (within
the fixed rate period) by reference to which the Mortgage Rate is calculated under the Fixed Reverting
to SVR Mortgage Loans, the Fixed Reverting to Tracker Rate Mortgage Loans and the Fixed Reverting
to LIBOR Mortgage Loans and Note LIBOR, the Issuer will on the Issue Date enter into an interest rate
swap transaction (the "Fixed - LIBOR Swap Transaction" and, together with the BBR-LIBOR Basis
Swap Transaction and the LIBOR Basis Swap Transaction, the "Interest Rate Swap Transactions")
with the Interest Rate Swap Counterparty pursuant to the Interest Rate Swap Agreement. Under the
Fixed - LIBOR Swap Transaction, the Issuer and the Interest Rate Swap Counterparty will make
payments to each other based on the aggregate outstanding principal balance of the Non Defaulted
Fixed Reverting to SVR Mortgage Loans, the Fixed Reverting to Tracker Rate Mortgage Loans and the
Fixed Reverting to LIBOR Mortgage Loans for so long as they accrue a fixed rate of interest (as more
particularly described under "Credit Structure – Swap Agreements").
Cross Currency Swap
In order to hedge the currency risk and interest rate risk arising by virtue of the amounts received by
the Issuer under the Interest Rate Swap Agreement and otherwise from the Mortgage Loans in sterling,
and the amounts payable by the Issuer in respect of the Euro Notes in euros, the Issuer will on the Issue
Date enter into a cross currency swap transaction in relation to the Alb Notes (the "Cross Currency
Swap Transaction" and, together with the Interest Rate Swap Transactions, the "Swap Transactions")
with the Cross Currency Swap Counterparty pursuant to the Cross Currency Swap Agreement. Under
the Cross Currency Swap Transaction, the Issuer will make payments to the Cross Currency Swap
Counterparty in sterling based on LIBOR and the Cross Currency Swap Counterparty will make
payments to the Issuer in euros based on EURIBOR . Principal payments in sterling equal to the
amounts available to be applied in repayment of the Euro Notes will be made by the Issuer to the Cross
Currency Swap Counterparty and be converted into euro at the rate of GBP 0.6836842105 per one euro
for the A1b Notes (as more particularly described under the "Credit Structure - Swap Agreements").
Interest Rate Cap
In order to hedge against interest rate exposure arising from the possibility of Mortgage Loans
becoming non-performing if Note LIBOR exceeds 8 per cent., the Issuer will enter into an interest rate
cap transaction (the "Interest Rate Cap Transaction") with the Cap Provider pursuant to the Interest
Rate Cap Agreement for a period of approximately 5 years in respect of a notional amount of
£242,750,000 (the "Notional Amount") (being approximately equal to 25 per cent. of the Principal
Amount Outstanding of the Notes on the Issue Date). Under the Interest Rate Cap Transaction, the Cap
Provider will make payments to the Issuer if and to the extent that LIBOR (determined in accordance
with the terms of the Interest Rate Cap Transaction) has risen above 8 per cent and the Issuer will pay
to the Cap Provider a periodic fee in accordance with the terms of the Interest Rate Cap Agreement and
the Pre-Enforcement Interest Priority of Payments (as more particularly described under the "Credit
Structure – Interest Rate Cap Agreement").