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PRESS RELEASE: Fitch Cuts 9 Tranches Kensington Mtge Sec.

Fitch Ratings-London-16 October 2009: Today Fitch Ratings downgraded nine tranches from Kensington Mortgage Securities Plc - Series 2007-1 (KMS). KMS is a securitisation of residential mortgage loans originated by Kensington Group Plc.

The downgrades reflect deterioration in the underlying collateral portfolio. The lack of seasoning in the transaction (in comparison to earlier vintage UK transactions) means that the portfolio has not benefitted from any house price appreciation, and has also not experienced any period of high prepayment to allow credit enhancement to build. The transaction has therefore has less protection from the high loss severity and worse collateral performance being seen across the non-conforming sector. Fitch expects further house price declines in the UK, and therefore the high volume of current repossessions in the pool are expected to continue to see high loss severity levels as properties are sold. In addition, growing unemployment levels are expected to result in more borrowers, particularly those already in arrears, being unable to meet their mortgage payments and leading to an increase in repossession levels.

In August 2009, along with an increase in loans in arrears for more than three months (26.91% of the current pool), there was a substantial increase in current repossessions to 3.54% from 2.60% in July 2009, amounting to GBP18.5m. This transaction also had approximately 7% of its loans classified as second-charge loans. Of the current second-charge loans, 34.3% are in arrears for more than three months with 18.44% in the nine months plus bucket. Given the loss severities being reported for these loans (around 130%), Fitch has assumed that no recovery is made on any loans that are more than three months in arrears.

Overall, given the increased size of the book of current repossessions and less seasoning of this transaction, Fitch expects to see loss severities continue to rise. As of the latest report in August 2009 the weighted average period loss severity was 37.84%. This is placing a significant stress on available excess revenue and has required the transactions to utilise its reserve fund since March 2009. The reserve fund is currently at 67% of its target amount, and Fitch expects significant further draws over the next year, with the reserve fund ultimately being fully depleted.

It should also be noted that the transaction has breached its pro rata amortisation trigger, where the arrears performance trigger was set at 22.5% of current outstanding collateral balance. Fitch does not expect that this trigger will be cured and therefore the notes will repay sequentially. This is a positive for the transaction, in particular the senior notes. Because of the sequential pay down the class A2 notes have been affirmed as they will receive principal first, and continue to pass a 'AAA' scenario due to the timing of their repayment. The lower class A3 notes will, however, take longer to repay and therefore remain exposed to losses for longer and have therefore been downgraded.

Fitch used its EMEA RMBS surveillance criteria, employing its credit cover multiple methodology, to assess the level of credit support available to each class of notes.

Ratings are as follows:

Kensington Mortgage Securities plc - series 2007-1:Class A2 (ISIN XS0292638334): affirmed at 'AAA'; Outlook Stable; assigned a Loss Severity Rating of 'LS-1'Class A2 DAC (XS0292642369): affirmed at 'AAA'; Outlook StableClass A3a (ISIN XS0292638920): downgraded to 'AA' from 'AAA'; Outlook Negative; assigned a Loss Severity Rating of 'LS-1'Class A3a DAC (XS0292644142): affirmed at 'AAA'; Outlook StableClass A3b (ISIN XS0292652756): downgraded to 'AA' from 'AAA'; Outlook Negative; assigned a Loss Severity Rating of 'LS- 1'Class A3b DAC (XS0292651949): affirmed at 'AAA'; Outlook StableClass A3c (ISIN XS0292640660): downgraded to 'AA' from 'AAA'; Outlook Negative; assigned a Loss Severity Rating of 'LS-1'Class A3c DAC (XS0292653051): affirmed at 'AAA'; Outlook StableClass M1a (ISIN XS0292639225): downgraded to 'BBB' from 'AA'; Outlook Negative; assigned a Loss Severity Rating of 'LS-3'Class M1b (ISIN XS0292651196): downgraded to 'BBB' from 'AA'; Outlook Negative; assigned a Loss Severity Rating of 'LS-3'Class M2b (ISIN XS0292639654): downgraded to 'B' from 'A'; Outlook Negative; assigned a Loss Severity Rating of 'LS-3'Class B1a (ISIN XS0292639902): downgraded to 'CCC' from 'BBB-';assigned a Recovery Rating of 'RR4'

Class B1b (ISIN XS0292651436): downgraded to 'CCC' from 'BBB-';assigned a Recovery Rating of 'RR4'

Class B2 (ISIN XS0292640157): downgraded to 'CC' from 'B'; assigned a Recovery Rating of 'RR6'

Further commentary and performance data on the transaction are available on the agency's public website, www.fitchratings.com.

The applicable criteria 'EMEA RMBS Surveillance Criteria,' dated 9 April 2009 and 'Global Structured Finance Rating Criteria', dated 30 September 2009" Are available at www.fitchratings.com:

Contacts: Aksel Etingu, London, Tel: +44 (0)207 682 7135; Alastair Bigley, +44 (0) 207 417 6278; Peter Dossett, +44 (0) 207 682 7427.

Media Relations: Julian Dennison, London, Tel: +44 020 7682 7480, Email: julian.dennison@fitchratings.com.

Additional information is available at www.fitchratings.com.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP:// FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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.

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  10-16-091303ET
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