Rating agency Standard & Poor's has warned it could slash the ratings on sophisticated debt instruments exposed to residential mortgage-backed securities, in the latest sign of the stress on structured credit products from the US sub-prime crisis.

S&P said yesterday it may downgrade the ratings of 33 individual tranches of collateralised debt worth $1.76bn (€1.27bn) as a result of their exposure to US securities backed by high-risk, first-lien, sub-prime mortgages.