For the first time Standard and Poor's has upgraded securitizations because of the performance of the underlying collateral.

The paper concerned was the subordinated tranches of two U.K. MBS deals: Sun Banking Corp.'s Maple Mortgage Securities (No.1) issue, which totaled GBP175 million ($275.4 million), and Barclays Bank's Gracechurch Mortgage Finance (No.2), which was worth GBP282 million in total.

The tranches in question - worth GBP93 million and GBP11.8 million respectively - were both raised to AA from A.

Sun Banking's deal was arranged by Greenwich Natwest, while Barclays' was done by Barclays Capital.

Both deals were launched in 1994 and were upgraded because of their "outstanding performance over a period of time," said Simon Collingridge, S&P's director of structured finance ratings. He added that the improved ratings reflect improving credit quality on the class B notes, a credit support percentage over twice the level originally required, a falling number of delinquencies and low cumulative losses.

"We are always looking at the ongoing performance of deals," Collingridge said. "As the market matures and when we see transactions pezrforming consistently well we can upgrade those deals accordingly."

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