Fitch Ratings Upgrades 2 Classes of Merrill Lynch 1998 CAN-1.

CHICAGO -- Merrill Lynch's commercial mortgage pass-through certificates, series 1998-CAN 1, is upgraded as follows by Fitch Ratings:

--$11.8 million class C to 'AA' from 'AA-';

--$8.2 million class D to 'A-' from 'BBB+'.

The remaining classes are affirmed as follows by Fitch:

--$85.1 million class A-2 at 'AAA';

--Interest-only class X at 'AAA';

--$9.1 million class B at 'AAA'.

Fitch does not rate the $10 million class E, $3.5 million class F and the $4.7 million class G certificates. Class A-1 has paid in full.

The rating upgrades are due to the collateral paydown and subsequent increased credit enhancement since issuance. As of the July 2005 distribution date, the transaction's balance declined by 32.2% since issuance, to $132.5 million from $182.1 million.

The pool is comprised entirely of loans secured by properties in Canada. The properties are interspersed across eight provinces, with the three highest concentrations in Alberta (29.9%), Ontario (22.6%) and Manitoba (14.8%).

GEMSA Loan Services, the master servicer, provided fiscal year-end (FYE) 2004 financials for 95% of the pool. The weighted average debt service coverage ratio (DSCR) has increased to 1.68 times (x) from 1.59x since issuance for the same loans.

One loan, 2% of the pool, is currently being specially serviced, formerly 30 days delinquent. The loan is collateralized by a limited service hotel in Calgary, AB. The borrower is currently abiding by a payment plan which has brought the loan current.

Also of concern is the largest loan in the transaction, Portage Place Shopping Center (10%). The loan is collateralized by a retail center located in Winnipeg, MB. The FYE 2004 DSCR based on net operating income was 1.01x. In 2001, the property lost a major tenant. The borrower has been attempting to re-lease the vacant space and the loan remains current.

Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies and relevant policies and procedures are also available from this site, at all times. This document will remain on the public site for seven days.