Standard & Poor's rated global structured securities performed better during the second quarter of 2004 than during the first. The upgrade rate for structured finance securities was more than three times the downgrade rate. This positive trend was pronounced across many sectors but was most noticeable among U.S. RMBS ratings. A review of the performance suggests continued strength among U.S. RMBS ratings and therefore upgrades, a significant increase in European and U.S. CMBS upgrades, and a significant decline in U.S. ABS downgrades. A notable increase in European ABS downgrades is due primarily to lowered ratings in the aircraft ABS area. Globally, in addition to aircraft ABS, a few other ABS asset types and CDO sectors continued to show weaknesses in their rating performance during the second quarter of the year.

The following performance was observed during the second quarter of 2004:

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