CMBS ratings stabilize from the first quarter
Trends in outstanding and newly issued commercial mortgage-backed securities are starting to stabilize when compared to the first quarter of 2013, Fitch Ratings reported.
"The majority of outstanding Fitch-rated investment grade classes maintained stable rating outlooks, while second-quarter downgrades declined over first quarter. CMBS downgrades will continue to decline due to fewer loans transferring to special servicing and fewer delinquencies," said Managing Director Mary MacNeill.
Additionally, new issuance metrics were stable quarter-over-quarter but have worsened since last year, due to higher Fitch stressed LTVs, more interest-only loans and more loans having or allowing additional debt.
“The increase in IO loans from a year ago makes average debt service coverage ratios look better,” said Managing Director Huxley Somerville. “However, the loans are poorer in quality and the Fitch LTV, which is up from a year ago, should also be considered.”
Looking ahead, Fitch said it expects the early summer uptick in rates to appear in third-quarter new issuance.