Abstract—This paper investigates the impact of fading correlation and channel degeneracy alias keyhole condition on the capacity of multiple-input multiple-output (MIMO) spatial multiplexing systems when instantaneous channel state information is available at the transmitter and receiver sides. Two special scenarios of a double scattering channel model are analyzed: (i) an extremely rich scattering environment corresponding to a conventional semi-correlated Rayleigh fading channel whereby correlation is accounted for either among the transmitting or the receiving antennas and (ii) a rank-deficient keyhole channel with a single degree of freedom and zero correlation at both sides of the wireless link. For both fading scenarios, closed-form capacity expressions are derived in terms of a cut-off signalto-noise ratio which must be solved for numerically. In the case of semi-correlated Rayleigh fading, the capacity expressions are obtained for two kinds of correlation structures, namely,...