In a conference call last week, Moody's Investors Service said that mutual fund-fee securitizations will be the next sector to get hit with ratings actions and deteriorating credit as a result of the new economic reality following the events of Sept. 11.

Like most other sectors that the rating agencies are watching closely, 12b-1 fee and other distribution-finance securitizations were experiencing volatility before the WTC attacks, but that volatility has been intensified by the severe economic downturn. Of course, deals at highest risk are those heavily exposed to equity valuations, which tumbled when the market reopened on Sept. 17.

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