Seven classes of notes issued by Lexington Capital Funding III Ltd., a hybrid collateralized debt obligation composed primarily of residential mortgage-backed securities, have been downgraded by Fitch Ratings.The downgrades were as follows: class A-3, from AAA to AA; class B, from AA to A; class C, from AA-minus to A-minus; class D, from A to BBB; class E, from A-minus to BBB-minus; class F, from BBB to BB; and class G, from BBB-minus to B-plus. Fitch also affirmed the ratings on two other classes in the CDO. The downgrades resulted from collateral deterioration, as 26.9% of the portfolio has been downgraded by at least one rating agency since the closing of the transaction, Fitch reported.
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