Fitch Ratings Affirms 2 Classes Of MCG Commercial Loan Trust 2001-1.

Business Editors

NEW YORK--(BUSINESS WIRE)--Jan. 14, 2004

Fitch Ratings affirms two classes of MCG Commercial Loan Trust 2001-1 (MCG 2001-1). These rating actions are effective immediately.

-- $137,777,151 class A notes 'AAA';

-- $35,363,000 class B notes 'A'.

MCG Commercial Loan Trust 2001-1 is a collateralized loan obligation (CLO) that closed on Dec. 27, 2001. The servicer is MCG Capital Corporation (Nasdaq: MCGC), based in Arlington, Virginia. The rated liabilities are supported by the cash flows of a static portfolio of high-yield loans to middle market U.S. businesses. The loans were made for the purpose of management buyouts, business growth, acquisitions, restructuring and liquidity. There is some over-concentration with regard to industry exposure which was addressed with Fitch's Vector model. The loan obligors primarily operate in broadcast and media, computers and electronics and business services sectors. The portfolio consists of senior loans.

It is important to highlight that the portfolio is a static pool, with no discretionary trading. Substitution is limited to defined circumstances not to exceed 20% of the original portfolio balance. To date, there have been three substitutions of the original loan investments due to prepayments of the original loans. Additionally, there was one loan bought out of the portfolio by the servicer due to the obligor's default on the loan.

The rated notes have experienced some increase in credit enhancement due to the pay down of the class A notes as a result of loan prepayments. As of the most recently available servicer report dated Oct. 20, 2003, MCG 2001-1 has paid down 40% of the class A notes, or 26% of the total liability structure. The portfolio has amortized since inception with 74% or $261,748,139 of the original $353,631,391 portfolio investments remaining, as of the Oct. 20, 2003 servicer report.

In conjunction with the review of MCG 2001-1, Fitch analysts conducted an extensive assessment of the loan collateral. Fitch notes that the loan portfolio has deteriorated in credit quality since the transaction closed. Although, the governing documents do not allow for 'material modification' of the loans within the portfolio, investors should note that the servicer has restructured and modified several loans within the portfolio (within the terms of the governing documents), which may impact the credit quality of these loans.

Based on the prepayment of the senior notes and the credit enhancement of the structure, Fitch has affirmed the rated liabilities of MCG 2001-1. Fitch will continue to monitor the credit quality of the loan investments closely, as well as any restructuring or modification to loan covenants to ensure the current ratings are consistent with the risk to note holders. Additional 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 Aug. 1, 2003 and also available at 'www.fitchratings.com'.