Upgrades Still Dominate MBS

Upgrades continued to represent the bulk of rating activity involving U.S. residential mortgage-backed securities in the first quarter, according to Standard & Poor's Ratings Services.

S&P's latest Structured Finance Global Ratings Roundup quarterly report indicated that there were 128 performance- related upgrades, six performance-related downgrades and 21 guarantor-related downgrades in that market in the first quarter.

The affected collateral types included prime, home equity, and home improvement mortgage loans.

Transactions backed by prime residential mortgage collateral recorded the highest number of upgrades, followed by deals backed by home equity loans, S&P said.

In contrast, the only rating actions on home improvement loan deals were negative.

"The prime sector's strong performance continues to showcase the stability of prime collateral, evidenced by the consistency of rating activity over the course of the past few years," said Ernestine Warner, a director in S&P's Structured Finance Surveillance group.

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