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Moody's sound warning as defaults on loans in CMBS rise 80% in Q2
Moody's Investors Service has claimed UK commercial property values fell have fallen 19% in the last 12 months, and with it the number of loans that have breached banking covenants such as loan-to-value ratios has increased.
Lead analyst Viola Karoly noted these securities "are becoming increasingly affected by the continued financial market turmoil and the worsening conditions in some countries' real estate markets".
"The number of loans experiencing adverse issues is growing," she warned.
Defaults on loans included in European commercial mortgage-backed securities rose 80% in the second quarter, according to Moody's Investors Service, which found loans in default had almost doubled and 68 loans were now on servicers' watch lists, compared with less than 30 at the end of 2007.
The lists indicate ``future developments in terms of potential loan event of defaults,'' the analysts wrote.
The Moody's report follows analysis from Fitch, a rival ratings agency, which showed a high chance of widespread defaults in the US and UK commercial property mortgage markets if the gloomy economic predictions for those markets were true.
Moody's said that more than 50 per cent of loans on servicers' watchlists were in CMBS transactions that closed in 2007, 35 per cent in transactions from 2006 and 13 per cent in transactions from 2005.
Lead analyst Viola Karoly noted these securities "are becoming increasingly affected by the continued financial market turmoil and the worsening conditions in some countries' real estate markets".
"The number of loans experiencing adverse issues is growing," she warned.
Defaults on loans included in European commercial mortgage-backed securities rose 80% in the second quarter, according to Moody's Investors Service, which found loans in default had almost doubled and 68 loans were now on servicers' watch lists, compared with less than 30 at the end of 2007.
The lists indicate ``future developments in terms of potential loan event of defaults,'' the analysts wrote.
The Moody's report follows analysis from Fitch, a rival ratings agency, which showed a high chance of widespread defaults in the US and UK commercial property mortgage markets if the gloomy economic predictions for those markets were true.
Moody's said that more than 50 per cent of loans on servicers' watchlists were in CMBS transactions that closed in 2007, 35 per cent in transactions from 2006 and 13 per cent in transactions from 2005.
Tue, 12th Aug 2008