Approximately $24 billion in U.S. commercial mortgage-backed securities loans are scheduled to mature in the next 12 months, heightening the risk of additional loan defaults, Fitch Ratings said.
The ratings giant remains particularly concerned with loans originated in 2007 since 80% of the 2007 vintage loans set to mature in the next 12 months will be unable to refinance, according to Karen Trebach, senior director at Fitch Ratings.
Trebach estimates that of the 1,900 fixed-rate conduit CMBS loans set to mature over the next year, 41% will struggle to refinance and would not be able to refinance under Fitch's stressed refinance guidelines.
Still, the ratings giant says defaults on the CMBS loans are already accounted for in the firm's reviews, so it does not expect an immediate ratings impact if the loans end up in default.
The trouble is many of the loans originated in 2007 were underwritten to pro forma income, Trebach says. In their current state, they are facing an uphill battle in trying to refinance.
"Conversely, only 27% (23% by balance) for the seasoned ten-year loans originated in 2002 would be in danger of defaulting at maturity," Trebach wrote in her report.