European CMBS Still Suffer Refi Drought

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Standard & Poor’s said in a report today that they expect refinancing pressure to intensify for European CMBS as €16.5 billion ($22.6 billion) in loans is set to mature in 2013.

The lack of refinancing option has affected the European CMBS market since 2011.  Ganesh Rajendra, managing director, head of credit & mortgage strategy at RBS Securities  said earlier this week at the American Securitization Forum’s annual securitization conference, that in 2012, 15 percent of CMBS or CRE loans in conduits that came up for refinancing, defaulted. Most of the rest of loans that came due were restructured and extended.

 “The biggest risk to asset performance in Europe is the lack of refinancing and that has affected CMBS in 2011 and 2012 and we think it will this year again,” he said.

S&P said that the volume projected to mature in 2013 is the highest number of loan maturities in European commercial mortgage-backed securities (CMBS) transactions the ratings agency has seen since  began tracking the performance of the loans.

Over half of the €16.5 billion balance relates to loans on German properties and under a quarter of the loans maturing in 2013 have additional junior debt, equating to a euro equivalent balance of about €1.7 billion, according to S&P.

“The weighted-average loan-to–value ratio of loans with junior debt is about 105%, highlighting the large number of loans that could find it difficult to refinance all of their debt,” said analysts. “As of year-end 2012, about 10% of the loans scheduled to mature in 2013 were already in special servicing.”


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