Three classes of Putnam Structured Products CDO 2001-1 Ltd., a collateralized debt obligation consisting partly of residential and commercial mortgage-backed securities, have been downgraded by Fitch Ratings.The rating agency also affirmed the ratings on four other classes in the transaction. "In Fitch's modeling, the portfolio is unable to generate sufficient interest proceeds to compensate [for] the costs of the floating-rate liabilities in both rising and flat interest rate scenarios," Fitch said. "This leads to deteriorating performance in the lower part of the capital structure while the senior notes benefit from structural protection features." Fitch said the portfolio backing the CDO consists of RMBS (32.3%), CMBS (13.6%), the debt of real estate investment trusts (23.5%), corporate bonds (16.1%), asset-backed securities (7.4%), and other CDOs (7.1%).

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