Fitch Affirms $480.2MM & Downgrades $111.9MM from ACA ABS 2003-2

Business Wire, August 3, 2007

NEW YORK -- Fitch has affirmed four classes and downgraded five classes of notes issued by ACA ABS 2003-2, Limited (ACA ABS 2003-2). The following rating actions are effective immediately:

--$115,639,749 class A-1SD notes affirmed at 'AAA';

--$248,645,194 class A-1SU notes affirmed at 'AAA';

--$7,893,498 class A-1SW notes affirmed at 'AAA';

--$108,000,000 class A-1J notes affirmed 'AAA';

--$51,000,000 class A-2 notes downgraded to 'A' from 'AA';

--$36,000,000 class A-3 notes downgraded to 'BBB-' from 'A';

--$7,000,000 class B-F notes downgraded to 'B ' from 'BBB' and removed from Rating Watch Negative;

--$14,901,123 class B-V notes downgraded to 'B ' from 'BBB' and removed from Rating Watch Negative;

--$2,980,225 class C notes downgraded to 'B' from 'BB' and removed from Rating Watch Negative.

ACA ABS 2003-2 is a collateralized debt obligation (CDO) that closed Nov. 6, 2003 and is managed by ACA Management, LLC. ACA ABS 2003-2 will not exit its reinvestment period until December 2007. However, the manager chose to use close to $100 million of principal cash to redeem the notes at the June 11, 2007 payment date.

Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime residential mortgage-backed securities (RMBS). In addition, ACA ABS 2003-2's portfolio contains a fairly sizeable exposure to subprime closed-end second lien (CES) RMBS assets, including under-performing 2006 vintage subprime CES RMBS bonds.

The portfolio is currently comprised primarily of subprime RMBS (65.3%), along with prime RMBS and other diversified structured finance assets. ACA ABS 2003-2 has approximately 32.8% exposure to subprime RMBS bonds of the 2005, 2006, and 2007 vintages. Since the beginning of 2007, over 20% of the portfolio has been downgraded, and another 10.5% of the portfolio is currently on Rating Watch Negative. The majority of these actions has occurred in the last three months and has been driven by credit deterioration in subprime RMBS bonds from the 2005 and 2006 vintages, including subprime CES RMBS bonds.

The subprime CES RMBS exposure consists entirely of bonds from the under-performing 2006 vintage, and represents approximately 8.7% of the portfolio. Nine of these subprime CES RMBS bonds, comprising about 5.9% of the portfolio, have migrated to 'CCC' from 'BBB/BBB-'.

Fitch believes that the credit deterioration in the portfolio has increased the risk profile of the class A-2, A-3, B-F, B-V and C notes.

The ratings of the class A-1SD, A-1SU, A-1SW, A-1J and A-2 notes address 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 class A-3, B-F, B-V and C 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.

Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Derivative Fitch web site at www.derivativefitch.com. For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Oct. 18, 2006 and also available at www.derivativefitch.com.

Fitch has commented on the performance of the 2006 vintage subprime CES RMBS in a press release dated May 22, 2007 entitled 'Second-Lien RMBS Exposure in CDOs Marginal But May Increase', available on the Derivative Fitch web site.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.derivativefitch.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. Fitch means Fitch, Inc., Fitch Ratings, Ltd. and their subsidiaries including Derivative Fitch, Inc. and Derivative Fitch Ltd. and any successor or successors thereto.