Standard & Poor's yesterday lowered its ratings on 49 tranches from 11 U.S. cash flow and hybrid CDO deals.

The rating agency removed 24 of the lowered ratings from CreditWatch with negative implications. Simultaneously, S&P placed a rating on CreditWatch negative.

The ratings on 25 of the downgraded tranches remain on CreditWatch with negative implications, which implies a significant likelihood of further downgrades, according to a release from the rating firm.

The CreditWatch placements mostly affect deals for which a significant portion of the collateral assets currently have ratings on CreditWatch negative or have significant exposure to assets rated triple-C.

The 49 downgraded U.S. cash flow and hybrid tranches have a total issuance amount of $4.441 billion. Ten of the 11 affected transactions are mezzanine structured finance (SF) CDOs of ABS. The other transaction is a high-grade SF CDO of ABS, which was backed at origination mostly by triple-A' through single-A rated tranches of RMBS and other SF securities.

Yesterday's CDO downgrades reflect a number of factors that included credit deterioration and recent negative rating actions on U.S. subprime RMBS
securities.

To date, including the CDO tranches affected by yesterday's downgrade actions as well as those on both publicly and confidentially rated tranches, S&P has lowered their ratings on 3,489 tranches from 826 U.S. cash flow, hybrid, and synthetic CDO deals because  of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS, according to the release.

Additionally, 1,373 ratings from 439 deals are now on CreditWatch negative for the same reasons, S&P said. In all, the rating agency has downgraded $385.929 billion of CDO issuance. Additionally, its ratings on $37.738 billion in securities have not been lowered but are now on CreditWatch negative, indicating a high likelihood of future downgrades.

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