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As usual, it is Fitch leading the way. From Bloomberg :

The market for collateralized debt obligations faces more downgrades as losses on mortgage-backed securities prompt Fitch Ratings to overhaul the way it assesses the risk of CDOs based on company debt.

Fitch will begin next month to affirm or assign new ratings for about 500 CDOs, the New York-based company said in a statement today.

``While Fitch expects many ratings to be affirmed, downgrades are also expected, in some cases by several rating notches,'' Fitch said in the statement.

Rating firms are responding to criticism from lawmakers and investors for assigning their highest ratings to some CDOs backed by subprime mortgages before the market collapsed last year. Moody's Investors Service, Standard & Poor's and Fitch have cut ratings on portions of CDOs packaging $482 billion of assets since July, Wachovia Corp. analysts wrote last week.