Fitch Ratings Affirms 11 Classes of Addison CDO Ltd. Notes.

NEW YORK -- Fitch Ratings affirms 11 classes of notes issued by Addison CDO Ltd. (Addison). The following rating actions are effective immediately:

-- $259,000,000 class I senior notes 'AAA';

-- $65,000,000 class II senior notes 'AA';

-- $15,000,000 class III mezzanine notes 'A';

-- $16,500,000 class IVa mezzanine notes 'BBB+';

-- $22,500,000 class IVb mezzanine notes 'BBB+';

-- $1,150,000 class Va mezzanine notes 'BBB';

-- $5,500,000 class Vb mezzanine notes 'BBB';

-- $2,548,858 class VIa participation notes 'BBB-';

-- $10,000,000 class VIb participation notes 'BB';

-- $5,000,000 class A combination securities 'BBB+';

-- $20,000,000 class C combination securities 'B'.

Addison, which closed Oct. 19, 2000, is a collateralized debt obligation (CDO) managed by Pacific Investment Management Company L.L.C. (PIMCO), whose leveraged loan group is currently rated 'CAM 1' by Fitch. Addison is composed primarily of high yield loans (90%) with a small allocation of high yield bonds (10%). Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios.

Since the last rating action on Sept. 18, 2003, the collateral has continued to perform within expectations. As of the most recent trustee report available dated Feb. 18, 2005, the senior, class III/IV, and class V/VI overcollateralization (OC) ratios have increased from 122.3%, 104.9%, and 101.5% to 123.3%, 105.7%, and 102.3%, versus triggers of 115%, 102% and 100%. Addison's defaulted assets represented approximately 0.87% of the $402.4 million of total collateral and eligible investments. Assets rated 'CCC+' or lower represented approximately 0.99%, excluding defaults, and the weighted average rating has remained stable at 'B+'. However, due to spread compression in the high yield loan market, the weighted average spread has lowered from 2.85% to 2.43% versus a trigger of 2.5% and the senior and class III/IV interest coverage (IC) tests have declined from 286.4% and 194.2%, to 193.6% and 144.8%, respectively, versus triggers of 120% and 110%.

The class VIa participation notes have paid down by approximately $1.04 million since the last rating action and are currently at 31.9% of the original class balance. The class VIa participation notes receive participation payments of excess spread, which are used to amortize the notes. In addition, the transaction holds $37.1 million in principal proceeds, which can be used to reinvest in collateral debt securities prior to the end of the reinvestment period occurring on Nov. 8, 2005. At the end of the reinvestment period, principal proceeds will be used to sequentially redeem the notes. As a result of this analysis, Fitch has determined that the current ratings assigned to the classes I, II, III, IVa, IVb, Va, Vb, VIa, VIb, and class A combination and class C combination notes still reflect the current risk to noteholders and require no ratings adjustment.

The rating of the classes I and II notes addresses 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 classes III, IVa, IVb, Va, and Vb 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. The ratings of the classes VIa, VIb, class A combination, and class C combination notes address the likelihood that investors will receive the ultimate stated balance of principal by the legal final maturity date, as well as an internal rate of return on the original investment of 5%, 4%, 4%, and 8.26%, respectively.

Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at 'www.fitchratings.com'. For more information on the Fitch Vector Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Sept. 13, 2004, also available on Fitch's web site.