Ballantyne Re Notes Downgraded

Three classes of notes in Ballantyne Re PLC have been downgraded by Fitch Ratings because certain reserve funds backing the transaction have "material exposure" to subprime residential asset- and mortgage-backed securities that have experienced significant market declines.The downgrades were as follows: class A-1 floating-rate notes, from AA to A-plus; class B-1 subordinated notes, from BBB-plus to BB-plus; and class B-2 subordinated floating-rate notes, from BBB-plus to BB-plus. The ratings remain on Rating Watch Negative. The rating agency said interest payments to classes B-1 and B-2 were suspended under the terms of the indenture on Sept. 4. "The class A-1 notes were downgraded because Fitch believes the risk profile of the notes is no longer consistent with the AA rating category," Fitch said. "Similarly, classes B-1 and B-2 were downgraded because Fitch does not consider the suspension of interest to be consistent with an investment-grade rating." Ballantyne Re is a special-purpose company incorporated in Ireland.