Commercial mortgage delinquencies to double: Fitch

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Commercial mortgage delinquencies to double: Fitch
Roughly $20 bln of commercial mortgages mature in 2009, rating agency says

By Alistair Barr, MarketWatch


SAN FRANCISCO (MarketWatch) - Commercial mortgage delinquencies will double next year amid a recession and rising unemployment, Fitch Ratings said on Thursday.

Fitch's loan delinquency index, which measures commercial mortgages that are at least 60 days delinquent within a universe of 475 transactions totaling $553.1 billion, will likely end 2008 at 75 basis points, up from 51 basis points recently, Mary MacNeill, managing director, U.S. commercial mortgage-backed securities, said during a conference call.

The index will likely rise to 1.5% or 2% by the end of 2009, she predicted.

"Given our bleak economic outlook, all property types should contribute to an increase in delinquencies," she said. Part of that outlook includes a Fitch assumption that U.S. unemployment reaches 8.3% by 2010.

In a worst-case scenario, the delinquency index could jump to 4.2% by the end of next year. That would happen if the $20 billion of commercial mortgage-backed securities due to mature in 2009 can't be refinanced, MacNeill added, while noting that's unlikely.

The $800 billion commercial mortgage-backed securities market showed signs of cracking this week as the potential default of two large deals amplified fears of spreading loan losses. ......(more)

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