Fitch Downgrades 6 Classes from ACA ABS 2003-2, Limited

Business Wire, July 28, 2008

NEW YORK -- Fitch downgrades six classes of notes issued by ACA ABS 2003-2, Limited (ACA ABS 2003-2). Additionally, all nine classes of notes issued by ACA ABS 2003-2 are removed from Rating Watch Negative. The following rating actions are effective immediately:

--$86,713,502 Class A-1SD Notes downgraded to 'B' from 'BB ', removed from Rating Watch Negative;

--$186,448,826 Class A-1SU Notes downgraded to 'B' from 'BB ', removed from Rating Watch Negative;

--$5,919,010 Class A-1SW Notes downgraded to 'B' from 'BB ', removed from Rating Watch Negative;

--$108,000,000 Class A-1J Notes downgraded to 'CCC' from 'B ', removed from Rating Watch Negative;

--$51,000,000 Class A-2 Notes downgraded to 'CC' from 'CCC', removed from Rating Watch Negative;

--$36,000,000 Class A-3 Notes downgraded to 'C' from 'CC', removed from Rating Watch Negative.

--$7,000,000 Class B-F Notes remain at 'C', removed from Rating Watch Negative;

--$14,901,123 Class B-V Notes remain at 'C', removed from Rating Watch Negative;

--$2,980,225 Class C Notes remain at 'C', removed from Rating Watch Negative.

ACA ABS 2003-2 is a cash flow structured finance (SF) collateralized debt obligation (CDO) that closed on November 6, 2003 and was managed by ACA Management, LLC until April 2008, when management duties were transferred to Solidus Capital, LLC. Presently 29.6% of the portfolio is comprised of 2005, 2006 and 2007 vintage U.S. subprime residential mortgage-backed securities (RMBS), and 1.3% is comprised of 2005 vintage U.S. Alternative-A (Alt-A) RMBS.

Fitch's rating actions reflect the significant collateral deterioration within the portfolio, specifically subprime RMBS. Since November 21, 2007, approximately 46.5% of the portfolio has been downgraded with 9.3% of the portfolio currently on Rating Watch Negative. 48.8% of the portfolio is now rated below investment grade, including 37.7% of the portfolio rated 'CCC ' and below. Fitch notes that, overall, 40.7% of the assets in the portfolio now carry a rating below the rating it assumed in November 2007. The negative credit migration experienced since the last review on November 21, 2007 has resulted in the Weighted Average Rating Factor deteriorating to 30 from 6, breaching its covenant of 5, as of the latest trustee report dated June 2, 2008.

The collateral deterioration has caused each of the overcollateralization (OC) tests to fall below 100% and fail their respective triggers. As of the latest trustee report the senior OC ratio was 74%, the class A-3 OC ratio was 68.6%, the class B OC ratio was 65.7%, and the class C OC ratio was 65.4%. As a result of the coverage test failures, the transaction is currently diverting interest proceeds from the class A-3, class B-F, class B-V, and class C notes, instead using these proceeds to redeem class A-1SD, class A-1SU, and class A-1SW principal, pro rata. Interest distributions owed to the class A-3, class B-F, class B-V, and class C notes are currently being deferred.

The ratings on the class A-1SD, class A-1SU, class A-1SW, class A-1J, and class A-2 notes address the timely receipt of scheduled interest payments and the ultimate receipt of principal as per the transaction's governing documents. The ratings on the class A-3, class B-F, class B-V, and class C notes address the ultimate receipt of interest payments and ultimate receipt of principal as per the transaction's governing documents. In addition, the class A-1SW notes are insured by a financial guaranty insurance policy issued by CIFG Guaranty (CIFG), whose insurer financial strength rating was downgraded by Fitch to 'CCC' in May 2008. The credit enhancement provided by CIFG to the class A-1SW notes was not factored into this review.

Fitch will continue to monitor and review this transaction for future rating adjustments. Additional transaction information and historical data are available on the Fitch Ratings web site at www.fitchratings.com.

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