The commercial mortgage-backed securities market issued $43 billion in bonds during 2011. That's two and a half times more than the $17 billion issued in 2010, Fitch Ratings said Thursday. Still, analysts said the commercial mortgage bond market – called everything from CMBS 2.0 to CMBS 3.0 – remains a system still in an evolutionary phase, and one with much work left to do. On the upside, CMBS underwriting improved with loan-to-value ratios dropping to 92% from the 111% seen pre-crisis, Fitch said. Analysts also see "little pure pro forma underwritten income" when compared to four years ago. The levels of credit enhancement are also higher than any time since 2002. The ratings agency said the trajectory of underwriting standards over the past two years is noteworthy. "It is undoubtedly true that standards have slipped. However, today's underwriting standards are still more conservative than those employed during the pre-recession boom. The real question is not whether they will continue to slip, but rather, if they do continue to slip, what will the response of the market be?" Fitch wrote in its CMBS report. As an example, Fitch said the percentage of pools with interest-only loans grew to 9.3% in 2011 from 5.6% in 2010. While the level is higher than the prior year, it's still considerably lower than the 55.5% in 2007. Additionally, loan-to-value ratios are creeping upward in new CMBS issuance, to 91.6% in 2011 from 82.7% in 2010. By way of comparison, Fitch said a typical LTV in 2007 would be around 110%, much higher than the safer standard of 82.9% in 2003. Overall, Fitch still wonders if investors are confident enough to aggressively get back in the market. "Perhaps the one open question that has the most potential to disrupt is how risk retention will be solved," analysts said. "To describe the various risk-retention options is beyond the scope of this report. However, Fitch believes risk retention in some form is necessary for the continued confidence in the market, especially with the anticipated growth in CMBS financings." "However, it is not just the regulators who will need to be satisfied with what is ultimately decided on," Fitch said. "It is investors who will determine whether the risk retention outcome is successful." Write to Kerri Panchuk.