Fitch: U.S. CMBS Delinquencies Climb Again on Larger Loan Defaults.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Defaults on larger loans were again chiefly responsible for another increase in CMBS CMBS See: Commercial Mortgage Backed Securities loan delinquencies to 0.88%, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the latest U.S. CMBS loan delinquency index from Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. . The December climb was due in large part to two loans with outstanding principal balances greater than $100 million, following a November reading which featured two defaults in excess of $70 million. Fitch expects that additional delinquencies on larger loans will continue to drive the index higher in 2009. "What began as weakness in the performance of smaller properties located in tertiary markets now includes larger collateral in secondary and primary markets," said Managing Director and U.S. CMBS group head Susan Merrick. "Highly levered loans on transitional assets that were originated at the height of the market are proving particularly susceptible to performance default, as the deepening recession continues to make stabilization according to schedule increasingly unlikely." The loan delinquency index currently includes 20 loans with a balance of $25 million or greater, six of which became newly delinquent in December. Excluding small balance loans, the average loan size of delinquencies within Fitch rated universe now stands at $8.2 million. This compares to an average loan size of $6.4 million for the same subset in December 2007. The December delinquencies included a $125.2 million loan secured by a retail property located in Corona, CA and a $104 million pari passu [Latin, By an equal progress; equably; ratably; without preference.] Used especially to describe creditors who, in marshalling assets, are entitled to receive out of the same fund without any precedence over each other. PARI PASSU. By the same gradation. note backed by a portfolio of two hotel properties located in Tucson, AZ and Hilton Head, SC. In each case, the respective loan sponsor was experienced with the property type, but cited economic hardship due to market deterioration as the cause of inability to meet debt service obligations. Both loans were securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. in early 2008. The 2008 vintage defaults, like those of other recent vintages, are rising at a faster pace compared to historical trends. Macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. contraction, coupled with the higher leverage that is characteristic of recent vintages, has pushed up default rates for loans in the 2006 and 2007 vintages. As of year-end 2007, 0.96% of Fitch-rated loans issued in 2006 and 0.41% of those issued in 2007 were 60 days or more delinquent, compared to the 10-year average default rate of 74 bps. Fitch expects that the accelerated pace of defaults witnessed in fourth quarter-2008 is likely to continue into 2009, bringing the index to approximately 2% by year-end. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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