Fitch Downgrades 5 Classes of Ischus CDO I, Ltd/LLC.

NEW YORK -- Fitch Ratings has downgraded five classes of notes issued by Ischus CDO I, Ltd./LLC.(Ischus).

These rating actions are the result of severe credit deterioration among 2004 vintage residential mortgage-backed securitizations (RMBS) experienced since Fitch's last rating action in September 2008. Approximately 91.5% of the portfolio has been downgraded since the last review, with about 69.1% of the portfolio downgraded since June 1, 2009. The main drivers for the downgrades in the underlying RMBS during the summer were the continued deterioration of home prices and employment rates causing an increase in delinquencies despite significant seasoning in the loans.

Approximately 90.2% of the portfolio carries a Fitch-derived rating below investment grade, with 65.0% rated in the 'CCC' category or lower. This is up from 32.5% rated below investment grade and 4.0% rated 'CCC' and lower at the last review. As of the August 2009 trustee report, 50.8% of the portfolio is considered defaulted.

Fitch has downgraded the class A-1 notes to 'CCC' as principal impairment of this class is likely given the exposure to defaulted assets. Fitch considers the default of the A-2, B, C-1 and C-2 classes of notes to be inevitable. Accordingly, these classes are downgraded to 'C'.

Ischus I is a collateralized debt obligation (CDO) with a static portfolio that closed in Dec. 29, 2004. The portfolio is monitored by Ischus Capital Management, LLC. The reference portfolio is composed of 61.1% subprime RMBS, 14.9% CDOs, 11.9% commercial mortgage backed securities (CMBS), 11.1% prime RMBS, and 1.0% asset-backed securities (ABS).

Fitch will continue to monitor and review this transaction for future rating adjustments. Additional transaction information and historical data are also available at 'www.fitchratings.com'.

Fitch has taken the following rating actions:

--$86,428,850 class A-1 notes downgraded to 'CCC' from 'A';

--$47,000,000 class A-2 notes downgraded to 'C' from 'BBB';

--$39,000,000 class B notes downgraded to 'C' from 'BB';

--$11,476,051 class C-1 notes downgraded to 'C' from 'B';

--$4,909,731 class C-2 notes downgraded to 'C' from 'B'.

These rating actions reflect the application of Fitch's current criteria, 'Global Rating Criteria for Structured Finance CDOs' (Dec. 16, 2008), available 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.