Collateral Turns Iffy for Large CMBS Deals

NEW YORK CITY-Having gone largely into eclipse following the 2008 capital markes crisis, CMBS is all but walking on sunshine these days. New issues keep coming forth—in the case of large-loan securitizations, volume for the first four months of 2013 is likely to nearly equal the 12-month tally of $11.2 billion for 2012. Meanwhile, legacy CMBS saw its largest one-month drop in delinquency since Trepp LLC began releasing a monthly report in 2009.

However, Fitch Ratings expressed concern recently about the quality of the underwriting in the sizable securitizations that have been announced of late.”’Large loan CMBS deals of late are coming to market with some average assets and aggressive assumptions,” Huxley Somerville, CMBS group head at the ratings agency, said last month. “In fact, the large loan CMBS landscape is changing so dramatically that Fitch is questioning much of what it’s seeing.”