Moody’s downgrade of CMBS continues

Moody’s Investors Service downgraded another few billion dollars worth of commercial mortgage-backed securities because of higher expected losses for the pool from increased delinquencies from troubled loans. In late September, the ratings agency said it was reviewing numerous CMBS transactions, as the foreclosure crisis spreads and the aggregate balance of many of loan pools decreases, resulting in interest shortfalls among other problems. Analysts also pointed to changes to Moody’s ratings methodology for conduit and fusion transactions that have become effective the past few years. Some of the larger downgrades this week include 10 CMBS classes from Merrill Lynch Mortgage Trust Series 2005-CIP1; 12 classes of JPMorgan Chase Commercial Mortgage Securities Corp. Series 2007-CIBC20; 14 classes of JPMorgan Chase Commercial Securities Corp. Series 2005-LDP1; nine classes of JPMorgan Commercial Mortgage Finance Corp. Series 2003-LN1, and 10 pooled and two nonpooled classes from Morgan Stanley Capital I Inc. commercial pass-through certificates Series 2007-XLF9. Moody’s also changed eight classes of GE Commercial Mortgage Corp. certificates Series 2004-C3 that were downgraded because of losses stemming from troubled loans. Earlier this week, Moody’s analysts said the value of loans liquidated within CMBS was higher in July than ever before at $1.5 billion. Also Thursday, Moody’s downgraded 34 tranches of Alt-A residential MBS worth billions of dollars issued by BCAP LLC in 2006 and 2007. Write to Jason Philyaw.