Europe looks set to reopen its CMBS new-issue market as Deutsche Bank preps a new £360 million ($580 million) deal for Blackstone Group, according to a Reuters report.

The bonds will be backed by a loan used by Blackstone to buy the Chiswick Park office complex. The loan to Blackstone  — at a 75% LTV  — is expected to be finalized by end of March, and sold in the 2Q11, Reuters reported.

It would be the first deal from Europe in three years. According to Fitch Ratings, one of the continuing problems that the sector still faces is refinancing risks.

The rating agency reported that of the 115 loans that have matured since the onset of the credit crisis, only 59 were repaid in full either at or after their scheduled maturity dates (26 and 14 loans, respectively) or through a repurchase by the originator (19 loans).

"Balloon risk remains the key driver of transaction performance and, consequently, of rating performance," analysts said. "A total of €6 billion ($8.2 billion) of European CMBS loans matured in 2010, bringing the total balance of matured loans since the onset of the credit crisis to €8.5 billion."

In the U.S., refinancing concerns have been abated by the more upbeat new-issue calendar that this year includes conduit deals and more levered loans than what was seen in the 2010 vintage deals.

The forecast for a bigger new-issue calendar over the next two years means that lending has once again opened up and market players believe refinancing shouldn't be as much of an issue for borrowers going forward.

Fitch said that the increased number of loan workouts in Europe CMBS that commenced during 2010 is beginning to result in loss allocations to some European CMBS transactions. Four loans securitized in Fitch-rated European CMBS transactions had a loss allocation during 4Q11, bringing the total for 2010 to six loans. No losses were realized in the previous year.

"A key driver of the increasing default rate is the volume of maturing loans," said Gioia Dominedo, senior director in Fitch's European CMBS team. The "134 loans are scheduled to mature in 2011 with a total balance of EUR12bn, double that of 2010, so Fitch expects this trend to continue."


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