Correction: Fitch Places $186MM on Watch Negative & Affirms $1.4B of Delphinus CDO 2007-1, Ltd.

CHICAGO & NEW YORK -- (This is a correction for a press release that was published earlier today. It corrects the rating on the Class D-2 notes.)

Fitch places five classes of notes on Rating Watch Negative and affirms eight classes of notes issued by Delphinus CDO 2007-1, Ltd. (Delphinus). The following rating actions are effective immediately:

--$640,000,000 Super Senior affirmed at 'AAA';

--$73,500,000 Class A-1A affirmed at 'AAA';

--$86,500,000 Class A-1B affirmed at 'AAA';

--$160,000,000 Class A-1C affirmed at 'AAA';

--$27,000,000 Class S affirmed at 'AAA';

--$144,500,000 Class A-2 affirmed at 'AAA';

--$138,500,000 Class A-3 affirmed at 'AAA';

--$131,000,000 Class B affirmed at 'AA';

--$77,500,000 Class C notes rated 'A' is placed on Rating Watch Negative;

--$48,000,000 Class D-1 notes rated 'BBB+' is placed on Watch Negative;

--$30,500,000 Class D-2 notes rated 'BBB-' is placed on Watch Negative;

--$15,000,000 Class D-3 notes rated 'BBB-' is placed on Watch Negative;

--$15,000,000 Class E notes rated 'BB' is placed on Watch Negative;

Delphinus is a hybrid mezzanine structured finance collateralized debt obligation (CDO) that closed on July 19, 2007 and is managed by Delaware Investments. Delphinus has a revolving portfolio composed of residential mortgage-backed securities (88.9%), commercial mortgage-backed securities (0.6%) and structured finance CDOs (6.75%). Currently, 80.8% of the portfolio is invested in synthetic collateral and 19.2% in cash securities. Delphinus will exit its reinvestment period in July 2012. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the cumulative default rates associated with the current ratings of the note liabilities.

The rating action taken on the class C, D-1, D-2, D-3 and E notes are the result of collateral credit quality deterioration. Since closing, 7.07% of the portfolio has been downgraded by at least one of the rating agencies by two or three sub-categories. The portfolio is comprised of primarily 2006 and 2007 vintage subprime collateral. The portfolio's exposure to 2006 vintage collateral includes 37.5% subprime RMBS, 5.4% prime RMBS and 1.7% structured finance CDOs. Exposure to 2007 vintage collateral includes 26.8% subprime RMBS, 16.9% prime RMBS and 5.1% structured finance CDOs. Although a relatively small portion of the pool has experienced actual rating downgrades, it is expected that additional negative rating migration will occur in the near to intermediate term. Furthermore, the structured finance CDOs in the portfolio consist in general of 2006 and 2007 subprime RMBS. The rating action is a result of Fitch's ongoing collateral portfolio review of SF CDOs where portions of the portfolio have been downgraded or placed on Rating Watch Negative by either Fitch or the other major rating agencies.

The ratings on the class S notes address the likelihood that the investors will receive timely payment of note interest, while the amortizing notional balance on the related notes remain outstanding. The ratings of the super senior notes, class A-1, A-2, A-3 and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The ratings of the class C, D-1, D-2, D-3 and E notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date.

This rating analysis also incorporated Fitch's revised methodology for rating structured finance CDOs, which assumes an increase to default probability for U.S. subprime RMBS bonds issued since 2005 by 25%. For more information, see 'Global Criteria Change for U.S. Structured Finance CDOs Reflects Heightened Subprime Risks,' dated Aug. 15, 2007 and available on the Derivative Fitch website at www.derivativefitch.com.

Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Derivative Fitch web site at www.derivativefitch.com. For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Oct. 18, 2006 and also available on Fitch's web site at www.derivativefitch.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.derivativefitch.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. Fitch means Fitch, Inc., Fitch Ratings, Ltd. and their subsidiaries including Derivative Fitch, Inc. and Derivative Fitch Ltd. and any successor or successors thereto.