Adams Square Swap Transaction Downgraded

A super senior swap transaction entered into by Adams Square Funding I Ltd., a collateralized debt obligation backed in part by mortgage-backed securities, has been downgraded and left on review for possible further downgrade by Moody's Investors Service.Moody's downgraded the U.S. $342 million Super Senior Swap Transaction from Ba2 to B3. The downgrade reflects "severe deterioration" in the credit quality of the underlying portfolio, as well as the occurrence of an event of default on Oct. 12 caused by a failure of the class A overcollateralization ratio to equal or exceed 100%, as required under the indenture. Adams Square Funding I is a hybrid CDO backed primarily by a portfolio of residential MBS, other CDOs, and synthetic securities in the form of credit default swaps.