Fitch Ratings last week announced that it would downgrade by one notch all unwrapped tranches of notes issued under the whole business securitization of Craegmoor Funding No. 2. The rating agency said it remains concerned about several issues connected with the deal, including qualified and late accounts, uncertainty over the accuracy of past performance reports, a lack of clarity on recent and current trading, and a concern that the financial covenant could be breached.

The issue comprised fixed and floating notes issued by Craegmoor Funding No.2 PLC and totaling GBP245 million ($430 million). This amount includes GBP157.5 million ($276.4 million) of triple-A rated paper. Fitch downgraded Craegmoor Funding No. 2's Class M notes to A- from A and the Class B notes to BB+ from BBB-. Fitch is keeping the Class M notes and the Class B notes on Rating Watch Negative. Although the Class A1 and Class A2 notes are wrapped to AAA by MBIA, Fitch downgraded the underlying rating to A from A+.

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