During the last ten years, the default rate on non-investment grade CMBS bonds was 0.14%, well beneath that of 3.07% for non-investment grade corporates. The CMBS average default rate for all bonds ranged between 0.07% and 0.10%, which reflects default rates measured by dollars and by issuers/class, while the rate for corporate bonds fluctuated between 1.51% and 2.41%.
"One explanation for the low CMBS default rate is the diversification that comes from multiple assets, multiple borrowing entities and multiple tenants," says Diane M. Lans, senior director of the company. She also notes that even though some of the highest corporate default rates were in retail outlets, supermarkets and drug stores, which affect the real estate market, there was no impact from these defaults on the CMBS bond defaults.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.