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Delinquencies in commercial real estate CDOs slid to 14.1% in May

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The level of delinquencies on commercial real estate loans in collateralized debt obligations slid back to 14.1% in May from 14.8% the month prior, according to Fitch Ratings. Analysts said asset managers in the sector reported losses of about $73 million last month from the disposal of defaulted and credit-impaired assets. Nine new delinquencies in May were offset by 18 loan workouts, according to the ratings agency. In April, CREL CDO delinquencies rose to 14.8% from 14.1% in March. Fitch Director Stacey McGovern said the realized losses are in line with the monthly average of the past year. She said delinquency rates of the CDOs range from 0.8% to 45.2%, yet the level of loans past due "is not expected to impact" the agency's ratings because Fitch analysis accounts for potential increases in delinquencies. Fitch rates 33 CREL CDOs and said most of the "senior classes continue to receive pay down to their most senior classes, as the CDOs either exit their reinvestment periods or have periods of over collateralization test failure." "However, ratings on the most junior classes remain subject to volatility as future realized losses may differ from current expectations," according to Fitch. The 33 CREL CDOs rated by Fitch include about 1,100 loans and 400 securities/assets with a total value of $19.9 billion. Write to Jason Philyaw.

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