"Refinancing to third parties remains difficult with nearly 90%of all new delinquencies this month considered matured balloonloans," according to a release. Overall, 67% of the CREL DIconsists of this type of delinquency, the release states. While 74%of matured balloon loans continue to make monthly payments,approximately 26%--or 18% of the CREL DI--are considerednon-performing with inadequate cash flow to meet debt serviceobligations, according to the release. In these instances, sponsorshave either refused, or are unable, to infuse additional equityinto the projects.

Asset managers continue to report loan extensions, according toFitch. In line with last month's total, asset managers reported 35new loan extensions in October, or 3% by number of loans in theCREL CDO universe.

"Borrowers continue to be challenged to meet all extensionrequirements by loan maturity," says Karen Trebach, a seniordirector with Fitch, in the release. "The increase in maturedballoons this month reflects that the extension process is takinglonger both to negotiate and document." Three loans, representing25 basis points, fell out of the CREL DI as the extensions weresuccessfully executed prior to this month's reporting cutoffdate.