The class B notes of South Coast Funding II Ltd., a collateralized debt obligation consisting largely of mortgage-backed securities, have been downgraded from BBB-minus to BB-minus by Fitch Ratings.The ratings on three other classes of notes in the CDO were affirmed. The downgrade was attributed to "the continuous deterioration of the underlying collateral, which outweighs the deleveraging of the transaction since the end of the reinvestment period." Fitch said about 81.4% of the South Coast deal consists of residential MBS, while the remainder is made up of other CDOs (8.7%), commercial MBS (4.9%), asset-backed securities (4.5%), and corporate debt (0.8%). Fitch can be found online at http://www.fitchratings.com.
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