Good news for commercial mortgage-backed securities: both the size and speed of cumulative defaults to decline, according to Fitch Ratings.
The U.S. CMBS cumulative default rate for fixed-rate CMBS increased only 10 basis points in the second-quarter of 2013, to 13.7%. This rate of increase was smaller than the 18 basis points rise at the end first-quarter 2013 from year-end 2012, said Fitch. And cumulative CMBS defaults are on track to finish lower than the 73-basis point movement from year-end 2011 to 2012.
In the second-quarter there were 97 newly defaulted loans totaling $1.4 billion, down from 101 loans totalling $2 billion in the first-quarter.
Another encouraging sign is that most newly defaulted CMBS loans are much smaller in size. Seventy-two of the 97 newly defaulted CMBS loans in the second quarter were under $15 million.
Offices continued to make up the largest component of new defaults with 47 loans, totaling $647 million. Retail had the second largest amount of loans default at 24.
Fitch tracks fixed-rate conduit deals issued between 1993 and second-quarter 2013 (totaling $599 billion). Loans are considered defaulted if they have been reported 60 plus days delinquent at least once prior to their maturity date.