Goldman Sachs, Citi CMBS deal garners high marks from Moody's
Moody's Investors Service assigned triple-A ratings to most of $876.5 million of commercial mortgage-backed securities being sold by Goldman Sachs (GS) and Citigroup (C). Analysts said there are 43 fixed-rate loans secured by 108 properties in the nine classes of pass-trough certificates marketed through the GS Mortgage Securities Trust 2010-C2. Moody's rates $848 million of the bonds, as there is an unrated class, which is standard in conduit/fusion deals. Some $347 million of Class A-1 and $376.1 million of Class A-2 certificates will carry gilt-edged ratings. Five other classes received ratings from Aa2 to B2, according to analysts. The transaction is expected to close this month. Moody's said the strong ratings reflect investment-grade credit estimates on six loans included in the transaction that account for about 16.1% of the pool balance. Analysts said the loan level diversity of the transaction is strong, and "higher than the indices calculated in most multi-borrower transactions issued since 2009." More than one-quarter of the loans are secured by multiple properties, which lowers cash-flow volatility and further strengthens the credit, according to Moody's. Property-level diversity also helps the ratings. And while the pool balance has a high concentration of single-tenant properties, it's not enough to offset other strengths. Nearly half of the loan pool includes retail properties that historically experience low volatility in operating income, while about 43% of the loans are office properties, which often experience high volatility in operating income levels and are riskier property types, according to analysts. Wells Fargo (WFC) is master servicer for the transaction, and Midland Loan Services is special servicer. Earlier this week, State Street (SST) announced the sale of $11 billion of asset-backed securities, including $6.6 billion of MBS. The buyer wasn't disclosed, but Bloomberg reported Goldman Sachs was set to begin offering $6 billion of mortgages it acquired from the Boston-based institutional investor. Write to Jason Philyaw.