Fitch Ratings downgraded four classes of notes issued by C-BASS CBO XI, a cashflow collateralized debt obligation (CDO) that closed in late 2004. Fitch slashed one class to triple-C from single-A. The other classes were also lowered to junk status. The actions came late Friday after severe credit deterioration among '04-vintage residential mortgage-backed securitization (RMBS) underlying the CDO, which is managed by C-BASS Investment Management. The portfolio includes 80.7% RMBS, 6.8% structured finance CDOs, 10.3% asset-backed securities (ABS) and 2.2% commercial mortgage-backed securities (CMBS). Since Fitch's last review in February 2009, about 58% of the portfolio faced downgrades, with 35% of the portfolio downgraded since June 1, 2009. The ratings agency indicated deteriorating house prices and high unemployment rates as driving factors in rising delinquencies despite "significant" seasoning of the loans. Fitch's downgrades were not isolated to the residential mortgage market on Friday, as commercial mortgages continue to deteriorate in performance. Fitch also downgraded 13 classes of '06-vintage commercial mortgage pass-through certificates out of GE Commercial Mortgage Corp. due to the rating agency's loss expectations on specially serviced loans. The ratings agency said it anticipates 4.6% losses on the affected transaction, should market conditions not recover for commercial mortgages. Write to Diana Golobay.