NEW YORK CITY—Since the first few securitizations following theCMBS market's near-death experience beganappearing in 2009, analysts have observed a gradual re-emergence ofpatterns that characterized so-called CMBS 1.0 loans. Among themare increasing loan-to-value ratios and a tilt towardinterest-only loans.

A recent Moody's Investors Service report,which said the industry has begun to experience “déjà vu all overagain,” found that about two-thirds of the CMBS deals originated inthe third quarter were IO, compared to 50% of the loans originatedduring 2013. Similarly, Fitch Ratings found thatIO and partial-IO combined represented nearly 60% of the conduitloans issued year-to-date through Q3, up from a total of 33.1% atthe end of 2012.

Already in 2011, a report from AAM Co.expressed concern that IO loans were becoming more common. “Thelower debt service costs of an interest-only loan make DSCR appearto be more conservative but in reality mask the risk in theunderlying collateral pool,” the report stated.