More B&C-Linked CDOs Downgraded by Fitch

Thirty-two classes of notes issued by six collateralized debt obligations linked to subprime residential mortgage-backed securities have been downgraded by Fitch Ratings. All but one of the downgraded classes were removed from Rating Watch Negative. The affected securities are as follows: eight classes from Lexington Capital Funding Ltd./Inc., a cash flow structured finance CDO; six classes from Blue Heron Funding II Ltd.; six classes from Ischus CDO II Ltd./LLC, a cash flow structured finance CDO; five classes from NovaStar ABS CDO I Ltd., a cash flow structured finance CDO; four classes from Lexington Capital Funding III Ltd./LLC, a hybrid cash and synthetic CDO; and three classes from Mulberry Street CDO Ltd./Corp., a cash flow structured finance CDO. The downgrades were attributed to collateral deterioration in subprime RMBS, as well as (in the cases of Lexington III and Mulberry Street) alternative-A RMBS and (in the cases of Lexington, Blue Heron, and Mulberry Street) structured finance CDOs with underlying exposure to subprime RMBS.