The CMBS market continues to feel the ripple effect of last week's announcement from Standard & Poor's that it would stop rating new conduit/fusion CMBS deals, with yet another transaction pulled from the market because of the rating agency's move.

Deutsche Bank Securities and Wells Fargo have temporarily stopped selling their $670 million Prima Capital CRE Securitization 2011-1 deal, according to  Thomson Reuters,

Kroll Bond Rating Agency assigned preliminary ratings to the deal earlier this year. The offering's collateral comprises 57 assets, which include 22 CMBS certificates from 11 trusts (26.0%); 19 REIT debt securities issued by nine REITs (25.3%); ten whole loans (24.2%) secured by first-priority liens on commercial real estate (CRE); two B-notes secured by liens on CRE (10.1%); two mezzanine loans (9.2%); and two credit tenant lease securities (5.2%).

Moody's Investors Service also rated the deal.

Despite S&P not having rated the deal, the agency's announcement has caused uncertainty within the CMBS market that is exacerbated by a deteriorating macroeconomy. The combination has kept CMBS issuance quiet as investors take a step back over the summer.

S&P's announcement was made in connection with its advanced notice of proposed criteria change. The rating agency said they would not currently assign ratings to transactions that are based on the U.S. conduit/fusion criteria.

Goldman Sachs and Citigroup Global Markets on July 27 were the first issuers to get notice that the rating agency would not be able to deliver final ratings for their GS Mortgage Securities Trust 2011-GC4 offering.

The ratings are a conditional precedent to closing and settlement of the GC4 transaction that was scheduled for July 28. S&P had previously informed Goldman and Citi that they were prepared to rate the GC4 transaction. As a result,  the two banks withdrew the GC4 transaction from the market.

S&P stopped rating CMBS deals because of the discovery of potentially conflicting methods to calculate debt service coverage ratios (DSCRs). The rating agency will review its application of conduit/fusion CMBS ratings criteria with regard to DSCR calculations.


Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.