The transaction uses a shifting interest repayment structure, wherein for the first five years of the transaction's life it repays senior and subordinate noteholders their pro rata share of borrowers scheduled principal payments, but subordinate notes will not receive any unscheduled principal payments.
After that five-year period is up, and throughout the rest of the transaction's term, the lockout is gradually diminished. The lockout, however, is subject to performance triggers, according to Moody's Ratings.
GS Mortgage-Backed Securities Trust 2025-PJ10 will sell the bonds to investors through a series of 30 class A notes and class B notes, Moody's said. All the notes have a legal final scheduled maturity of April 2056, according to analysts at Fitch Ratings.
Classes A1 through A18 benefit from subordination that represents 15% of the note balances, Moody's said. And depending on the deal's net weighted average coupon (WAC), the notes have approximate pass-through rates ranging from 4.5% on the A3 notes to 6.0% on the A29 class, the rating agency said.
All the assets underpinning GSMBS 2025-PJ10 benefited from third-party due diligence, and all loans were graded 'A' or 'B'.
There is some tail risk in the transaction, which develops as the pool assets are seasoned and reduces the number of loans outstanding. To mitigate this, the transaction has a senior and a junior subordination floor 0.81% and 0.56%, respectively, Fitch said.
Fitch finds that the prime mortgages in the combined pool have an average loan balance of $1.2 million, an original FICO score of 781 on a weighted average (WA) basis, with an original cumulative loan-to-value ratio of 74.7%. Also on a WA basis, the underlying borrowers have a low debt-to-income (DTI) ratio of 38.6%, and significant liquid reserves of $392,430.
Moody's ratings on the notes include Aaa to the A1 through A30 tranches; Aa3 on the B1 notes; and A3 on the B2 notes. Fitch's assigned ratings include AAA to the A9 through the A27 notes; BBB on the B3 notes; BB- on the B4 notes; and B- on the B5 tranche.
