Thursday, July 21, 2011

Fitch: Is CMBS 2.0 a Sign of Healthy Growth or Cause for Concern?



NEW YORK, NY--Amid  mounting  concern  that  U.S.  CMBS underwriting standards are on the decline,  Fitch  Ratings  believes  that  there is quite a way to go before standards approach levels seen in 2007, viewed by many as the most volatile vintage for CMBS.

Some  market participants fear that we will shortly see loans comparable to
the  worst of the loans made between 2006 and 2008. While Fitch agrees that
underwriting  standards  have declined in recent months, it should be noted
that that deterioration thus far has been off of its very high standards.

‘It  was  only a matter of time before CMBS underwriting standards began to
decline  from  such an unusually high level,’ said Huxley Somerville (top right photo), Group
Managing Director and head of U.S. CMBS for Fitch.

Fitch  anticipated a drop in underwriting standards in its ratings, already
raising  credit enhancement levels for new CMBS to ensure ample credit risk
protection.

 ‘If  CMBS credit metrics begin to drop more precipitously, Fitch will raise credit enhancement levels accordingly,’ said Somerville.

Fitch  discusses this trend in greater detail in its latest U.S. Structured Finance  Snapshot,  which  is  available  at  www.fitchratings.com  under
‘Latest Research’.

Contact:

Huxley Somerville, Head of U.S. CMBS
Group Managing Director
+1-212-908-0381
Fitch, Inc., One State Street Plaza, New York, NY 10004,

Media Relations: Sandro Scenga +1-212-908-0278, New York;

Additional information is available at www.fitchratings.com

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