Here we go again.

Offices, hotels and shopping malls backing commercial mortgage bonds are now as highly leveraged as they were heading into the financial crisis, according to Moody’s Investors Service.

Moody’s has its own measure of the leverage in CMBS conduits, which does not reflect the recent run up in commercial property prices. Instead, the rating agency compares the size of a loan to what it considers to be an average value for the property through a business cycle.

Using this measure, the average loan-to-value (LTV) ratio in conduits rose to 117.8% in the second quarter of the year. That’s just over the pre-crisis peak Moody’s LTV of 117.5%.

By comparison, LTVs based on appraised values, which is generally what loan originators use to report underwritten LTV, have held steady in the mid- to high 60% range.

“The appraisals on second quarter collateral fully reflect the run-up in commercial property prices to levels that top the pre-crisis peak, while our values use a through-the-cycle approach, resulting in twin peaks for both prices and MLTV,” Moody’s stated in its second quarter CMBS review.

Moody’s LTVs on second quarter CMBS ranged as high as 122.7% for the $955.2 million WFCM 2015-NXS1 to 112.2% for the $1.15 billion GSMS 2015-GC30.

Before the financial crisis, the difference between the value that Moody’s used to assess conduit loans and underwritten value grew from about 20% in 2003 to about 40% at the 2007 peak. History is now repeating itself, and Moody’s values once again average more than 40% below those reported by underwriters.

It can only get worse.

The pipeline of CMBS that Moody’s has been asked to rate in the third quarter indicated that leverage is likely to increase further.

Moody’s takes a more conservative view of conduit leverage than other major rating agencies, which is an important reason that it has been demanding more investor protection, in the form of credit enhancement, for these deals. This has sometimes resulted in lost business, as CMBS sponsors opt not to hire Moody’s to rate a deal, or only hire it to rate certain tranches of a deal.

“For the last two quarters, our assessment for class D enhancement has exceeded the enhancement level assigned by others to class C, a more senior class typically intended to carry a rating three notches higher,” Moody’s stated in Thursday’s report.

It noted that, since the first quarter of 2013, the enhancement levels assessed by other rating agencies have been largely unchanged despite the considerable deterioration in conduit loan credit quality, while Moody’s assessments have risen by more than 500 basis points.

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