E*Trade CDO Classes Downgraded

Five classes of notes issued by E*Trade ABS CDO I Ltd., as issuer, and E*Trade ABS CDO I LLC, as co-issuer, have been downgraded by Fitch Ratings and removed from Rating Watch Negative.The downgrades were as follows: class B third-priority senior secured floating-rate notes, from AA-plus to A-minus; class C-1 mezzanine secured floating-rate notes, from BBB to B-plus; class C-2 mezzanine secured fixed-rate notes, from BBB to B-plus; preference shares, from BBB-minus to CCC-minus; and composite securities, from BBB-minus to CCC-minus. Fitch also affirmed the ratings on two classes. The transaction, a static cash flow collateralized debt obligation, is supported by a diversified portfolio of asset-backed securities, residential mortgage-backed securities, commercial MBS, and CDOs. Fitch attributed the downgrades to a "deterioration in the credit quality of E*Trade I's collateral pool and the negative impact of its interest rate hedge." If expected recovery estimates on the securities are not realized, Fitch said it may take further action on the notes. Fitch can be found online at http://www.fitchratings.com.