Fitch Revises Thornburg's IDR to 'CCC' on Interest Payment Cure; Rating Watch Negative

NEW YORK--(BUSINESS WIRE)--Based on Thornburg Mortgage Inc.'s (Thornburg) Dec. 12, 2008 payment within the 30-day grace period of interest due on Nov. 15, 2008 for its 8% senior notes, Fitch Ratings has revised Thornburg's Issuer Default Rating (IDR) as follows:

--IDR to 'CCC' from 'RD'.

Fitch has maintained the following ratings:

--Senior notes at 'C/RR6';

--Senior secured subordinated notes at 'C/RR6';

--Subordinated notes at 'C/RR6';

--Preferred stock at 'C/RR6'.

The IDR of 'CCC'is indicative of Fitch's view that default of Thornburg's corporate obligations is a real possibility, given that the Amended Override Agreement Thornburg entered into with its reverse repurchase lenders expires in March 2009. In the absence of renewed financing arrangements for its assets currently being funded with reverse repurchase agreements, Thornburg's ability to meet corporate debt obligations would be in doubt.

The 'RR6' recovery ratings for the rated securities are due to Fitch's continued belief that recoveries in the event of default would be poor.

The Rating Watch Negative is based on the March 2009 expiration of Thornburg's Amended Override Agreement and the potential for a substantial decrease in funding if Thornburg is unable to obtain an extension of the Amended Override Agreement or an alternative funding source.

Based in Santa Fe, New Mexico, Thornburg Mortgage, Inc. is a lender to the single-family residential mortgage housing market and is focused principally on the jumbo segment. Thornburg originates, acquires and retains investments in adjustable-rate mortgage (ARM) assets. Thornburg's ARM assets are comprised of Purchased ARM Assets and ARM Loans. All of Thornburg's ARM assets are either Traditional ARMs, which includes Pay Option ARMs, or Hybrid ARMs. For tax purposes, Thornburg is organized as a real estate investment trust (REIT) and is managed externally by Thornburg Mortgage Advisory Corporation.

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.