More than half of all downgrades experienced by the U.S. CDO sector in the first quarter stemmed from synthetic transactions, according to Standard and Poor's. However, only 17 synthetic CDOs were downgraded, compared to a record 43 in the fourth quarter.

Implications for the synthetic CDO sector from corporate credit events within the U.S. auto sector - such as the bankruptcies of autoparts manufacturer Dana Corp. - were relatively muted compared with the volatility seen at yearend 2005, S&P reported in its quarterly tally of sector-specific upgrades and downgrades.

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