NEW YORK CITY—A little more than a year ago, Fitch Ratings expressed concern over the quality of the underwriting in many of the sizable securitizations that were being announced. “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 at the time. “In fact, the large loan CMBS landscape is changing so dramatically that Fitch is questioning much of what it’s seeing.” The credit enhancement, Fitch reported, was insufficient to achieve AAAsf ratings.

This year, Somerville and his team at Fitch have a new worry. Although the quality of the properties has improved, the absolute level of debt on large loans issued this year pose the risk now.

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