S&P report warns CMBS defaults on the rise, peak default period ahead according to a report issued by Standard and Poors on August 18, 2009 –
With the effects of the recession visible across all commercial property sectors and debt financing scarce, defaults among rated North American commercial mortgage-backed securities (CMBS) increased last year.
The 529 new CMBS defaults in 2008 is more than twice the number reported in 2007–and future periods are likely to experience higher default levels as more recently issued loans enter their peak default periods.
For its 2008 default study, S&P studied the characteristics of 69,317 loans originated for securitization from 1993 through 2007 with a total original principal balance of $949.21 Billion. Loans originated between 2005 and 2007 made up 41.45% of the studied population by loan count (28,732) and 56.57% by principal balance ($537 Billion).
For its 2008 default study, S&P studied the characteristics of 69,317 loans originated for securitization from 1993 through 2007 with a total original principal balance of $949.21 Billion. Loans originated between 2005 and 2007 made up 41.45% of the studied population by loan count (28,732) and 56.57% by principal balance ($537 Billion).
At the end of 2008, 3,107 loans ($20.43 Billion) in rated CMBS transactions had defaulted on a cumulative basis. For 2008, the cumulative default rate by loan count was 4.48%, and the annual default rate was 0.76%. In terms of principal balance, the 529 loans that defaulted in 2008 had a principal balance of $4.43 Billion, significantly more than the $1.85 Billion that defaulted in 2007.
Of the major property types, office space saw the greatest increase in defaulted loans in 2008, as 389 office loans defaulted, up 30.98% from 297 in 2007.
Recent Posts:
- Taxpayers to the Rescue of Afghanistan Banking Crisis?
- Economic Data and Earnings Schedule for September 2 2010
- Christina Romer Makes a Final Recommendation Before Leaving To Teach Keynesian Economics
- Homebuilder Hovnanian (HOV) Reports Dismal Quarter
- Auto Sales Data for August 2010
- Stock Market Rewind – September 1, 2010
More on this topic
(What's this?)
FINRA are so…decorative
(naked capitalism, 7/21/10)
The Next Wave of the Housing Crisis: Much More Pain in 2010, 2011
(REIT Wrecks, 3/17/10)
Jail for Unpaid Debt a Reality in Six States (Strategic Default Pushback Watch)
(naked capitalism, 6/14/10)
I watched your video, Monday, 8/17. I have to say I learned a lot from it but I have some questions. I am, young and inexperienced with trading. Really I have only begun. Although you backed up your projections with credible evidence, could it really be true? Is this really just a five month long bare rally? Are investors really headed into desaster? Isn’t the sheer demand for stocks going to keep the market moving up? What you said makes total sense: Unemployment isn’t getting better, consumer spending is still down, and forclosures are expected to rise, but the rally continues. Every time you hear “Good” news the market rallies, and vise versa. It’s like the market is full of sheep! With that, wont the market continue to rally (with expected adjustments). Investors want to get back in the game so isn’t that enough for now? I’d love to know what you think.