单选题 Which of the following is a general problem associated with external credit enhancements? External credit enhancements: A. only provide protection against systematic risk, not against idiosyncratic risk. B. are very long-term agreements and are therefore relatively expensive. C. are subject to the credit risk of the third-party guarantor.

【正确答案】 C

【答案解析】According to the "weak link" philosophy adopted by rating agencies, the credit quality of an issue can not be higher than the credit rating of the third-party guarantor. Along these lines, if the guarantor is downgraded, the issue itself could be subject to downgrade even if the structure is performing as expected.