It's looking more likely that the credit derivative product company (CDPC) Athilion Capital Corp. will be downgraded over the short term. Until now, CDPCs had been relatively unaffected by the credit crunch, but the latest action on Athilion will bring this sector under the spotlight.

Moody's Investors Service last week announced that it had put the triple-A counterparty and debt ratings of this CDPC on review for downgrade. This follows Fitch Ratings' announcement earlier in the month that it had placed the CDPC on rating watch negative as a result of exposure to structured finance CDOs for which Athilon sold protection to counterparties. These transactions have experienced significant negative ratings migration in their underlying collateral assets.

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