OREANDA-NEWS. Fitch Ratings has upgraded two classes issued by MSCI 2004-RR2 as a result of increased credit enhancement to the notes from principal paydowns. A complete list of rating actions follows at the end of this release.

KEY RATING DRIVERS
Since the last rating action in September 2014, approximately 74.6% of the collateral has been upgraded. Currently, 74.6% of the portfolio has a Fitch derived rating of investment grade compared to 88.6% at the last rating action, and the balance of the portfolio has a Fitch derived rating below the 'CCC' category compared to 11.4% at last review. Over this period, the transaction has received \\$16.7 million in principal paydowns which has resulted in the full repayment of the class F, G, H, J and K notes and \\$462 thousand in paydowns to the class L notes.

This transaction was analyzed under the framework described in the report 'Global Rating Criteria for Structured Finance CDOs'. The current portfolio consists of only three CMBS bonds. Due to the concentration, a deterministic analysis was performed where the recovery estimate on the distressed collateral was modeled in accordance with the principal waterfall. An asset by asset analysis was then performed for the remaining assets to determine the collateral coverage for the remaining liabilities. Based on these analyses, the L and M notes have been upgraded to reflect their coverage by investment grade collateral and the likelihood of continued delevering over the next year, as the two non-distressed bonds within the collateral portfolio are in senior positions within their respective transactions.

MSCI 2004-RR2 is a static ReRemic backed by commercial mortgage backed securities (CMBS) B-pieces and closed on June 29, 2004. The transaction is collateralized by three CMBS assets from three obligors from the 1997 and 1998 vintages.

RATING SENSITIVITIES
The senior notes are expected to continue to amortize as 74.6% of the collateral are senior positions in their respective underlying transactions. The Stable Outlook on the class L and M notes reflects Fitch's view that the transaction will continue to delever.

DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.

Fitch has upgraded the following classes:

--\\$1,983,979 class L notes to 'AAsf' from 'Bsf'; Outlook to Stable from Positive;
--\\$1,630,000 class M notes to 'AAsf' from 'Bsf'; Outlook to Stable from Positive.