Moody's af­firms 6 CMBS Classes of FREMF

The Pak Banker - - COMPANIES/BOSS -

Global rat­ing agency Moody's af­firms the rat­ings of six classes of FREMF 2012K706. The af­fir­ma­tions of the prin­ci­pal classes are due to key pa­ram­e­ters, in­clud­ing Moody's loan to value (LTV) ra­tio, Moody's stressed debt ser­vice cov­er­age ra­tio (DSCR) and the Herfind­ahl In­dex ( Herf), re­main­ing within ac­cept­able ranges. Based on our cur­rent base ex­pected loss, the credit en­hance­ment lev­els for the af­firmed classes are suf­fi­cient to main­tain their cur­rent rat­ings.

The rat­ings of the two IO classes, Class X1 and Class X2-A, are con­sis­tent with the credit per­for­mance of their ref­er­enced classes and thus af­firmed. Moody's rat­ing ac­tion re­flects a base ex­pected loss of 3.7% of the cur­rent bal­ance. This is the first full re­view since se­cu­ri­ti­za­tion. Moody's pro­vides a cur­rent list of base ex­pected losses for con­duit and fu­sion CMBS trans­ac­tions on moodys.com at http://v3.moodys.com/viewre­search­doc.aspx?do­cid=PBS_S F215255. De­pend­ing on the tim­ing of loan pay­offs and the sever­ity and tim­ing of losses from spe­cially ser­viced loans, the credit en­hance­ment level for rated classes could de­cline be­low the cur­rent lev­els. If fu­ture per­for­mance ma­te­ri­ally de­clines, the ex­pected level of credit en­hance­ment and the pri­or­ity in the cash flow wa­ter­fall may be in­suf­fi­cient for the cur­rent rat­ings of th­ese classes.

The per­for­mance ex­pec­ta­tions for a given vari­able in­di­cate Moody's for­ward-look­ing view of the likely range of per­for­mance over the medium term. From time to time, Moody's may, if war­ranted, change th­ese ex­pec­ta­tions. Per­for­mance that falls out­side the given range may in­di­cate that the col­lat­eral's credit qual­ity is stronger or weaker than Moody's had an­tic­i­pated when the re­lated se­cu­ri­ties rat­ings were is­sued. Even so, a de­vi­a­tion from the ex­pected range will not nec­es­sar­ily re­sult in a rat­ing ac­tion nor does per­for­mance within ex­pec­ta­tions pre­clude such ac­tions. The de­ci­sion to take (or not take) a rat­ing ac­tion is de­pen­dent on an as­sess­ment of a range of fac­tors in­clud­ing, but not ex­clu­sively, the per­for­mance met­rics.

Pri­mary sources of as­sump­tion un­cer­tainty are the ex­tent of growth in the cur­rent macroe­co­nomic en­vi­ron­ment given the weak pace of re­cov­ery and com­mer­cial real es­tate prop­erty mar­kets. Com­mer­cial real es­tate prop­erty val­ues are con­tin­u­ing to move in a mod­estly pos­i­tive di­rec­tion along with a rise in in­vest­ment ac­tiv­ity and sta­bi­liza­tion in core prop­erty type per­for­mance.

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