Fitch Ratings has placed certain notes in 59 collateralized debt obligations backed partly by trust preferred securities or real-estate-related debt on Rating Watch Negative. The rating actions, affecting mainly junior classes of notes rated in the BB, BBB, and A categories, stem from "a significant increase" in TruPS defaults and deferrals as well as deterioration in the credit quality of issuing banks. "Observed deferrals continue to be driven by ... residential construction loan exposure, residential mortgage production, and lack of a core deposit franchise," Fitch said.
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