Moody's on Thursday affirmed the ratings of 13 classes and downgraded two classes totaling $3.5 million of Merrill Lynch Financial Assets' Series 2007-Canada 21 pass-through certificates. The 40 loans in the pool, which total $366 million, have not experienced any losses since securitization, according to Moody's, but five of them are on the master servicer's watchlist.

Earlier this month, Moody's said its latest CMBS Delinquency Tracker put the aggregate rate of delinquencies among US CMBS conduit and fusion loans at 3.02%, based on data through the end of July. In the prior month, it was 2.67%. The agency says it continues to expect the aggregate rate to reach 5% to 6% by year's end, whereas it was as low as 0.48% a year ago.

Hotels saw the greatest month-to-month increase in delinquencies, with the rate rising 143 basis points during July to 4.69% from 3.26%. The worst-performing sector is multifamily at 5% delinquency, although its 43-basis-point rise was eclipsed by that of hotels. Office remains the best performer, rising 20 basis points to end July at 1.8%. According to a release, "because the property type typically has longer leases, it may be several months before delinquencies in this sector see large increases."

Industrial and retail loans both experienced a 28 basis point increase in delinquency in July. The retail delinquency rate now stands at 3.2%, a nearly four-fold increase since the end of last year. Delinquencies for loans backed by industrial properties now stand at 2.25%, says Moody's.