European CMBS Market Shows Signs of Diversity
In the first half of 2003, a maturing European Commercial Mortgage Backed Securities (CMBS) market has shown increased signs of diversity, in terms of both rating activity and also the nature of transactions rated, according to a new report by Standard & Poor’s. Stuart Nelson, a credit analyst in Standard & Poor’s Structured Finance Ratings group, said rating activity driven by collateral performance continues to be dominated by upgrades, and the extent of loan prepayments is likely to remain a key factor in this trend. ‘Any future downgrades, on the other hand, are likely to be significantly determined by supporting party ratings, with rating changes of lessees in sale and leaseback transactions and supporting bank party ratings potentially leading to similar rating changes in certain transactions,’ Nelson said. In terms of issuance trends, the market continues to develop as volumes are rising, the breadth of issuers and investors is continually growing, and the market is developing in terms both of property types being securitized and structural innovations, according to credit analyst David Beale.