Fitch Downgrades 2 & Affirms 4 Classes of WAVELAND - INGOTS, LTD.

NEW YORK -- Fitch Ratings has downgraded two and affirmed four classes of notes issued by WAVELAND - INGOTS, LTD. (Waveland). These rating actions are the result of Fitch's review process and are effective immediately:

--$47,826,595 class A-1 notes affirmed at 'AAA';

--$120,612,694 class A-2 notes affirmed at 'AAA';

--$14,500,000 class B-1 notes affirmed at 'A',

--$10,000,000 class B-2 notes affirmed at 'A';

--$34,777,783 class C-1 notes downgrade to 'CCC' from BBB';

--$2,560,515 class C-2 notes downgrade to 'CCC' from 'BBB'.

The rating actions reflect Fitch's view on the credit risk of the rated notes following the release of its new Corporate CDO rating Criteria.

Waveland is a cash flow collateralized debt obligation (CDO), which closed on June 24, 2003 and is managed by Pacific Investment Management Company LLC (PIMCO). As of the July 9, 2008 trustee reports, the transaction's portfolio was composed of 90% senior secured leveraged loans, 2.4% senior secured bonds, 3.4% senior unsecured bonds, and 4.7% synthetic investments. The total collateral balance is $234.9 million with an additional $3.4 million of proceeds in the principal collection account.

Since the last review in February of 2007, Waveland has entered its amortization period and the manager has begun de-levering the structure. To date, approximately $13 million of principal of class A-1 and A-2 notes have been paid down. While the amortization improved credit enhancement levels for all classes of notes, the increase was not significant enough to offset the effects of overall credit deterioration in the pool. As per the July 9, 2008 trustee report, Fitch's weighted average rating factor (WARF) is 51.73, as compared to 49.01 in the Jan. 9, 2007 trustee report, which was used in the prior review. The average rating of the current portfolio is 'B+/B', with approximately 7.2% rated 'CCC or below'. At the time of the last review, only 3.2% of the portfolio carried a 'CCC' rating. Additionally, approximately 26% of the current pool is on Outlook Negative and 6.6% is on Rating Watch Negative, indicating a strong possibility of further credit migration and defaults. Defaulted assets constitute 2% of the portfolio.

Available excess spread is used to pay the Mezzanine and Additional Interest payments, which are applied towards the rated balance of the class C-1 and C-2 notes. As of the last payment date in June 2008, class C-1 notes received a total of $5,972,215 of Mezzanine and Additional Interest which was used to reduce the principal of the notes. The class C-2 notes received $439,484 in interest payments from Mezzanine and Additional Interest. As the most subordinate notes in the structure, the class C notes are highly dependent on available excess spread to be used for payments of principal. Fitch projects that future distributions to class C-1 and C-2 will diminish over time as the amount of available excess spread declines due to the amortization of the underlying collateral and future defaults assumed for various rating level stresses. As a result, the likelihood of class C-1 and C-2 meeting their rating criteria is consistent with a 'CCC' rating.

The ratings of the class A-1 and A-2 notes address the likelihood that investors will receive full and timely payments of interest on scheduled interest payment dates, as provided for within the Indenture, as well as the stated balance of principal by the final payment date. The ratings of the class B-1 and B-2 notes address the likelihood that investors will receive ultimate and compensating interest payments, as well as the stated balance of principal by the final payment date. The rating to ultimate interest addresses the full payment of deferred interest by the final payment date. The ratings of the class C-1 and C-2 notes address the return of principal and the basic interest amount by the final payment date. The rating of the class C-1 and C-2 notes assumes that all interest distributions in excess of the basic interest amount are used to fulfill the principal amount with respect to the Fitch rating of the class C-1 and C-2 notes.

Fitch released updated criteria on April 30, 2008 for Corporate CDOs and, at that time, noted it would be reviewing its ratings accordingly to establish consistency for existing and new transactions. As part of this review, Fitch makes standard adjustments for any names on Rating Watch Negative or Outlook Negative, reducing such ratings for default analysis purposes by two and one notch, respectively. For more information, see Global Rating Criteria for Corporate CDOs, dated April 30 2008 and available on the Fitch website at www.fitchratings.com.

Included in this review, Fitch conducted cash flow modeling to measure the breakeven default rates relative to the cumulative default rates associated with the current ratings of the note liabilities. The cash flow model incorporates the transaction's structural features and updated default timing and interest rate scenarios. For more information, see Global Criteria for Cash Flow Analysis in Corporate CDOs, dated April 30, 2008 and available on the Fitch website at www.fitchratings.com.

Additional deal information and historical data are available on the Fitch's web site at www.fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.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.