Fitch Ratings has downgraded two and affirmed two classes of notes issued by Porter Square CDO II, Ltd./Inc. (Porter Square II) as a result of continued credit deterioration in the portfolio since last review in February 2009. Approximately 76.7% of the portfolio has been downgraded since that time. The details of the rating action follow at the end of this press release.

As per the October 2009 trustee report, the current balance of the portfolio is $99.4 million. Defaulted securities, as defined in the transaction''s governing documents, now comprise 30% of the portfolio, compared to 13.8% at last review. The downgrades to the portfolio have left approximately 82% of the portfolio with a Fitch derived rating below investment grade and 69.6% with a rating in the ''CCC'' rating category or lower (including defaulted assets), compared to 60.9% and 30.1%, respectively at last review.

This review was conducted under the framework described in the report ''Global Rating Criteria for Structured Finance CDOs'' using the Structured Finance Portfolio Credit Model (SF PCM) for projecting future default levels for the underlying portfolio. Due to the significant collateral deterioration, all PCM rating loss rates exceed the credit enhancement available to each class of notes. In addition to credit deterioration of the portfolio, the transaction continues to divert portion of the principal proceeds to pay accrued interest to timely classes, thus reducing the amount of principal proceeds available to pay down the notes. Given these factors, Fitch believes that the likelihood of default for all classes of notes in this transaction can be assessed without performing cash flow model analysis under the framework described in the Global Criteria for Cash Flow Analysis in CDOs report.

As of the November 2009 distribution date, the class A-1 notes have been paid in full. Due to the significant collateral deterioration, however, the class A-2 notes are downgraded to ''CC'' to indicate Fitch''s belief that default is probable at or prior to maturity.

While the class B notes are still receiving current interest distributions, given the large outstanding amount of the class A-2 notes and expected low recoveries for assets considered defaulted, Fitch believes that default is inevitable for the class B notes at or prior to maturity.

The class C and class D notes are affirmed at ''C'', indicating Fitch''s continued belief that default is inevitable at or prior to maturity. Both classes are currently paying-in-kind interest due and are not expected to receive any future interest or principal payments.

Porter Square II is a structured finance collateralized debt obligation (SF CDO) that closed on Oct. 27, 2004 and is managed by TCW Asset Management Company. Presently 52.7% of the portfolio is composed of residential mortgage-backed securities (RMBS), 24.8% consist of high yield CDOs, 12.5% of U.S. SF CDOs, and 5.8% is comprised of investment grade corporate CDOs. The remaining 4.6% consists of commercial mortgage-backed securities (CMBS) 3.8%, and commercial asset-backed securities (ABS) 0.8%.

Fitch has downgraded or affirmed the following classes of Porter Square II as indicated:

--$0 class A-1 notes have been paid in full;

--$63,166,902 class A-2 notes downgraded to ''CC'' from ''B'';

--$23,500,000 class B notes downgraded to ''C'' from ''CCC'';

--$10,479,127 class C notes affirmed at ''C'';

--$9,087,827 class D notes affirmed at ''C''.

Fitch does not assign Rating Outlooks to classes rated ''CCC'' or lower.

These rating actions reflect the application of Fitch''s current criteria which are available at ''www.fitchratings.com'' and specifically include the following reports:

--''Global Structured Finance Rating Criteria'' (Sept. 30, 2009).

--''Global Rating Criteria for Structured Finance CDOs'' (Dec. 16, 2008);

--''Global Criteria for Cash Flow Analysis in CDO'' (Nov. 9, 2009).

Additional information is available at www.fitchratings.com.

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Fitch Ratings
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Kevin Kendra, 212-908-0760, New York
or
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Email: sandro.scenga@fitchratings.com