Fitch: 249 Distressed RMBS Bonds Default

Despite a respite from fresh waves of sweeping residential mortgage-backed securities downgrades due to better home prices, as an analyst recently warned, due to the still-high delinquency pipeline the risk of a ripple effect from some previous downgrades already in progress remains.

Fitch on Friday downgraded another 249 distressed bonds in RMBS deals to Dsf, indicating they have incurred a principal write-down. All the bonds previously had Csf ratings, which indicated that a default was expected.

Of the 249 classes affected, 152 are prime, 52 are subprime, and 34 are alternative-A, with the remainder from “other sectors,” according to Fitch.

About 51% of the downgraded bonds are expected to recover 50%-100% of their current outstanding balance, but 34% have a 0% recovery rate.