2008-07-24 22:42:04 -

- Fitch Ratings has affirmed and removed the following class of notes from Irvington SCDO 2004-2 Ltd. (Irvington) from Rating Watch Negative:

--$25,000,000 class A-1 note due 2010 'AAA'.

The rating action reflects Fitch's view on the credit risk of the rated notes following the release of its new corporate CDO rating criteria.

Although it was indicated

previously that the notes will most likely be downgraded to the 'AA' category, the affirmation accounts for the stable performance of the portfolio credit quality, which has remained essentially the same without further deterioration since Fitch placed the transaction on Rating Watch Negative on May 16. As such, with a scheduled termination date of September 2009, the transaction has benefited from the passage of time and a decrease in the risk horizon. The rating action considered this short tenor remaining in the transaction.

In its analysis, Fitch considered the average portfolio quality of 'BBB-' with 11.8% of the portfolio currently on Rating Watch Negative and 8.6% with a Negative Outlook. Additionally, 20.4% of the portfolio is concentrated in the banking & finance industry.

Given Fitch's view of concentration, the current credit quality of the portfolio and the tenor of risk associated with the portfolio, the credit enhancement level of 6.5% is sufficient to justify the current rating of the notes.

Irvington is a static, single tranche synthetic collateralized debt obligation (CDO) giving investors leveraged access to the credit risk of a portfolio of mostly investment-grade, corporate reference entities. The trust gains access to the credit risk of the portfolio via a credit default swap between Irvington and Bear Stearns Credit Products Inc., as swap counterparty (guaranteed by JPMorgan Chase Bank, N.A.; rated 'AA-/F1+' with a Stable Outlook by Fitch). The notes are rated to timely payments of interest and ultimate receipt of principal by the scheduled maturity date.

Fitch released updated criteria for corporate CDOs on April 30 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 with a Negative Outlook, downgrading such ratings for default analysis purposes by two and one notch, respectively. Fitch has previously noted that its review will be focused first on ratings most exposed to risks it has highlighted in its updated criteria. As such, the transaction was placed on Rating Watch Negative on May 16. As previously indicated, resolution of the Rating Watch status depends on any plans managers/arrangers may choose to modify either the structure or the portfolio. In this case, the arranger has confirmed that it does not intend to make any modifications.

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.

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