Central Tower Estate Co. has launched a Y135.7 billion CMBS transaction, marking the largest-ever Japanese CMBS.

The transaction, led by Mizuho Securities Co. Ltd. and Daiwa Securities SMBC Co. Ltd., is backed by four office buildings that were purchased from KDDI Corp. The notes are secured by interest in the trust with Yasuda Trust & Banking Co. Ltd. The deal also entails subordinated loans and a TK equity investment under Japan's commercial code, which is subordinated to the rated notes.

Moody's Investors Service assigned a preliminary rating of Aaa to the class-A notes, Aa2 to the class-B notes, A2 to the class-C notes, Baa2 to the class-D notes and Ba1 to the class-E notes. Standard and Poor's also assigned equivalent ratings to the tranches.

The quality of the real estate assets and the credit enhancement from the subordinated piece contribute to the transactions high preliminary ratings. The strong legal structure and the loan-to-value (LTV) ratio of the underlying collateral are also contributing factors to the ratings.

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