The percentage of interest-only loans in commercial mortgage-backed securities is rising, increasing the risk of losses in these deals.

The latest CMBS to hit the market, a $1.49 billion conduit sponsored by German American Capital Corp. and Cantor Commercial Real Estate, has weighted average Interest Only (IO) Index of 33%, according to a presale report published today by Kroll Bond Rating Agency. By comparison, the IO index on the last six CMBS deals Kroll has rated ranged between 12% and 39% and averaged 26%.

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