Standard & Poor's this week took Aames Financial Corp. debt off its watch list, affirming the company's BB-minus rating.

The Los Angeles-based subprime lender had been on review for a possible downgrading since last November, after faster-than-expected prepayments had forced it to write down the value of interest-only strips it retains from its securitizations.

Since then, Aames has revised the prepayment assumptions it uses in calculating gain-on-sale income. The revised assumptions "are more realistic," S&P said. "Future earnings will be subject to less volatility."

The rating agency also noted that Aames has refocused on making direct loans to customers, rather than through third-party brokers. The use of brokers was blamed for much of the acceleration in prepayments.

In March investors Ronald O. Perelman and Gerald J. Ford agreed to acquire 9.9% of Aames' outstanding shares.

That resolved some uncertainty created by the company's announcement late last year that it was considering a sale, S&P said. Though the stake could increase over time, S&P said it believes Aames will enjoy reasonable autonomy.

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