Search
 

Fitch Expresses Caution on Floating Rate Deals

NEW YORK CITY-Fitch Ratings predicts 2006 will be another big year for the CMBS sector. Fitch does place a yellow caution flag on the performance of floating-rate transactions.

By Barbara Jarvie | Updated on January 05, 2006

(To read more on the debt and equity markets, click here.)

NEW YORK CITY-It will be another banner year for CMBS, according to Fitch Ratings. Fitch expects upgrades to continue to far outpace downgrades. The outlook for fixed-rate multi-borrower transactions is more positive than that for floating-rate large loan deals.

Fitch views floating-rate transactions with caution in a rising interest rate environment. If transitional assets do not turn around and stabilize in the projected time, refinancing of those assets at maturity could be problematic, the report says “Refinancing risk and adverse selection leave floating-rate transactions more susceptible to downgrades,” says Mary MacNeill, managing director, Fitch Ratings. Although delinquencies have been noted in areas affected by Hurricane Katrina as well as Rita and Wilma, some of these are expected to be short lived once insurance proceeds are received. In addition, loans in the Hurricane Katrina disaster area are a small percentage of all CMBS.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 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.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.