Fitch cuts CapitalSource to junk

Fitch Ratings said it downgraded CapitalSource Inc.'s long-term issuer default rating to BB+ from BBB- and its senior subordinated rating to BB- from BB+, and placed ratings on Rating Watch negative.

The downgrade reflects concern that weakening financial performance will persist in 2009, reflecting mainly deteriorating asset quality, and this will further challenge the company's ability to comply with financial covenants under its bank line of credit, according to the agency.

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