Two classes of notes issued by Enhanced Mortgage-Backed Securities IV Ltd., a mortgage market value collateralized debt obligation, have been downgraded by Fitch Ratings.Class A-4 was downgraded from BB-minus to B, and preference shares were downgraded from B-minus to CCC/DR5. Both classes remain on Rating Watch Negative, and class A-2 from the deal was placed on Rating Watch Negative. The downgrades were attributed to concerns about the proceeds that are likely to result from the sale of assets in view of current price volatility. The watchlist placement was based on Fitch's view that breaches of the transaction's overcollateralization tests "may occur in the near future," the rating agency said. The collateral of the CDO consists of mortgage- and asset-backed securities, other CDOs, and agency obligations.

Subscribe Now

Authoritative analysis and perspective for every segment of the mortgage industry

30-Day Free Trial

Authoritative analysis and perspective for every segment of the mortgage industry