The long dormant and sleeping credit crisis, being the commercial mortgage backed security markets, may be awakening. At this point it appears the CMBS market stabilized and was nicely kept off bank balance sheets. This could be changing and we may be in for a wave of CMBS writedowns.
A kinda running joke that two cities 10,000 miles apart from each other both have vacant office space, that has been vacant since 2008. Meaning? CMBS looses (substantial) happening around about now
WSJ 23 Sept 2010
"Standard & Poor's Ratings Services downgraded $1.71 billion of collateralized debt obligations of commercial mortgage-backed securities because of deteriorating credit and cuts to the underlying securities.
S&P has lowered ratings on hundreds of billions of dollars in mortgage-backed securities and CDOs in the past year as estimates for the amount of losses in them continue to rise.
On Thursday, the ratings company cut 22 tranches from four U.S. CDO of CMBS transactions and removed them from watch for further downgrade. It affirmed 12 tranches from three deals and removed five of those from watch for downgrade. Delinquencies on commercial mortgages continue to rise even as home-loan delinquencies have plateaued for now.
CDOs, which use such sliced-and-diced assets as subprime-mortgage bonds to create customized securities offering various levels of risk, were at the heart of steep write-downs at big banks and brokerage firms"
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