Standard & Poor's placed about $7.3 billion worth of subprime bonds on CreditWatch with negative implications last Tuesday, a dose of consolation to a market that originally thought the rating agency would downgrade $12 billion of bonds.

Still, the subprime RMBS market had plenty to worry about last week. The rating agency subsequently downgraded 498 classes, leaving 26 classes on CreditWatch, and removing 74 from watch for a downgrade late Thursday afternoon. Adding fuel to the fire, Moody's Investors Service on Tuesday afternoon downgraded $5.2 billion in 399 2006 subprime RMBS and placed an additional 32 RMBS under review for possible downgrade. If this were not enough, late Thursday, Fitch Ratings placed 33 classes from 19 structured finance CDOs on rating watch negative as well as kept on review for downgrade eight classes of four structured finance CDOs, affecting a total of $803 million. The rating agency also put 170 U.S. subprime transactions on review for rating actions.

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