Morgan Stanley MBS Classes Downgraded

Classes A and AX of Morgan Stanley Capital I Inc. mortgage pass-through certificates, series 1997-FF1, have been downgraded from Aa2 to A3 by Moody's Investors Service.The downgrades were based on the support of a long-term lease to the Fireman's Fund Insurance Co., whose insurance financial strength rating was downgraded to A2 on July 25, Moody's said. The rating agency said it considers a lease obligation to be "the equivalent of an unsecured debt" and therefore inferior to an insurance company's policyholders' claims. "This results in an unsecured debt rating one notch below the insurance financial strength rating," Moody's said. The certificates are secured by two mortgage loans collateralized by a 711,000-square-foot office complex in Marin County, Calif., that serves as the headquarters of Fireman's Fund. Fireman's Fund is a wholly owned subsidiary of Allianz Insurance Co., whose ultimate parent company is Allianz AG, one of the largest insurance groups in the world, Moody's said. The rating agency can be found online at http://www.moodys.com.