As the first European CDO with a 100% European asset pool was downgraded last week due to faltering credit quality, the outlook for more downgrades might be graver than originally expected.

Sirius Finance 2000 Plc was downgraded last week, and all tranches of notes were affected: a 52.6 million Class A tranche was downgraded to double-A-plus from triple-A; a 67.9 million Class B tranche was downgraded to triple-B from single-A-minus; and the Class C notes suffered a downgrade to single-B-plus from triple-B.

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