Fitch Revises Thornburg's IDR To 'CCC' After Defaults Cured; Outlook Negative

Business Wire, April 29, 2008

NEW YORK -- Given Thornburg Mortgage, Inc.'s (Thornburg) entry into an override agreement with Thornburg's five remaining reverse repurchase agreement counterparties and their affiliates, and Thornburg's recent offering of senior subordinated secured notes, Fitch Ratings has revised Thornburg's Issuer Default Rating (IDR) as follows:

--IDR to 'CCC' from 'RD'.

Fitch has also maintained the following ratings:

--Senior notes remain at 'C/RR6';

--Subordinated notes remain at 'C/RR6';

--Preferred stock at remain 'C/RR6'.

Fitch has also assigned a 'C/RR6' rating to Thornburg's new senior subordinated secured notes.

The IDR is based on default remaining a real possibility for Thornburg's corporate obligations, particularly if Thornburg becomes exposed to meaningful margin call risk after expiration of the override agreement. The security-specific ratings are based on poor recovery prospects in the event of default of such securities.

The Rating Outlook on Thornburg's IDR is Negative based on the potential adverse effect on Thornburg's profitability of continued volatility in the market prices of residential mortgage-backed securities and reduced origination volumes relative to prior years.

Based in Santa Fe, New Mexico, Thornburg Mortgage, Inc. is a lender to the single-family residential mortgage housing market and is focused principally on the jumbo segment. Thornburg originates, acquires and retains investments in adjustable-rate mortgage (ARM) assets. Thornburg's ARM assets are comprised of Purchased ARM Assets and ARM Loans. All of Thornburg's ARM assets are either Traditional ARMs, which includes Pay Option ARMs, or Hybrid ARMs. For tax purposes, Thornburg is organized as a real estate investment trust (REIT) and is managed externally by Thornburg Mortgage Advisory Corporation.

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.