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NEW YORK CITY-Fitch Ratings has assigned a negative outlook to more than 40 classes of 2006- and 2007-vintage CMBS from JPMorgan Chase and Banc of America, while Moody’s on Thursday downgraded a pair of CMBS classes issued by Merrill Lynch in Canada two years ago. The ratings actions, which also included affirmations by both agencies on several classes, occur two weeks after Moody’s reported a monthly increase of 345 basis points in the delinquency rate for conduit and fusion CMBS loans.

On Thursday, Fitch took a total of 27 classes of JPMorgan Chase Commercial Mortgage Securities Corp. pass-through certificates from ’06 and ’07 off its ratings watch list and assigned them a negative outlook. The agency says in a release that its forecasts potential losses of 6.8% for the 2006-CIBC17 series and 7.3% for the 2007-CIBC20, “should market conditions not recover.”

The downgraded ’06 classes from JPMorgan represent $460 million in loans, while the downgraded ’07 classes total $351.5 million. According to Fitch, two of the top 15 ’06 loans and 12 of the top 15 ’07 loans, representing 12.4% and 47.9% of their respective pools, are expected to default during the term or at maturity, with loss severities ranging from approximately 1% to 18%.

Of the ’06 JPMorgan loans, the largest contributors to loss are Bank of America Plaza in Atlanta; the Towers in Great Neck, NY; and the Bonnie Lane and Northlake Portfolio, a 13-building portfolio of single-story office properties in Cordova, TN and Tucker, GA.For the ’07 pool, the largest contributors by loan balance to term losses are the North Hills Mall in Raleigh, NC; Baldwin Park Retail in Orlando; and the Everbank Building in Jacksonville, FL, says Fitch.

The 16 classes of series 2007-5 Banc of America CMBS downgraded by Fitch total $334.8 million in loans. Fitch forecasts losses on 11 of these, representing 43% of the pool. The largest contributors to loss, by outstanding balance, are the Smith Barney Building in San Diego; the Sherman Oaks Marriott in Sherman Oaks, CA; and West Hartford Portfolio, a 23-property multifamily portfolio in Hartford.

Moody’s on Thursday affirmed the ratings of 13 classes and downgraded two classes totaling $3.5 million of Merrill Lynch Financial Assets’ Series 2007-Canada 21 pass-through certificates. The 40 loans in the pool, which total $366 million, have not experienced any losses since securitization, according to Moody’s, but five of them are on the master servicer’s watchlist.

Earlier this month, Moody’s said its latest CMBS Delinquency Tracker put the aggregate rate of delinquencies among US CMBS conduit and fusion loans at 3.02%, based on data through the end of July. In the prior month, it was 2.67%. The agency says it continues to expect the aggregate rate to reach 5% to 6% by year’s end, whereas it was as low as 0.48% a year ago.

Hotels saw the greatest month-to-month increase in delinquencies, with the rate rising 143 basis points during July to 4.69% from 3.26%. The worst-performing sector is multifamily at 5% delinquency, although its 43-basis-point rise was eclipsed by that of hotels. Office remains the best performer, rising 20 basis points to end July at 1.8%. According to a release, “because the property type typically has longer leases, it may be several months before delinquencies in this sector see large increases.”

Industrial and retail loans both experienced a 28 basis point increase in delinquency in July. The retail delinquency rate now stands at 3.2%, a nearly four-fold increase since the end of last year. Delinquencies for loans backed by industrial properties now stand at 2.25%, says Moody’s.

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