Standard & Poor's placed 1,196 tranches in 129 re-REMIC transactions on watch for possible downgrade.

The reason for placing deals on watch stems from S&P improperly structuring interest cash flows in deals that pay interest on a pro-rata versus sequential basis. According to a report from Barclays Capital analysts, the action was motivated not by a rise in loss expectations, but were mostly a result of the potential for interest shortfalls.

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