Tallying the upgrades and downgrades for asset-backed vehicles each quarter always yields a mixed bag of emotions. In the CDO sector, however, 1Q 2003 will shine particularly bright - collateralized debt obligations racked up the only upgrades seen over the last three months. Furthermore, they were unseated as the leader in downgrades.

Moody's Investors Service released its first quarter upgrade/downgrade report this week and found that while high downgrade activity did continue in the first quarter - dominated by tobacco settlement-related securitizations - only five upgrades were recorded in the first quarter, and all were asset-backed CDOs.

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