Moody's Investors Service's Tokyo office has reported that it has assigned prospective ratings to the first transaction backed by a hotel in Japan.

The five fixed-rate tranches in the 40 billion yen (approximately $365 million) commercial mortgage-backed securities deal received prospective investment-grade ratings that ranged from Aaa to Baa1.

Notes in the deal are ultimately backed by Sheraton Grande Tokyo Bay hotel and cash reserve accounts.

Moody's noted that it only rated the credit risks in the senior-subordinate deal, and that other non-credit risks that might have a substantial effect on the notes' yield were not considered in assigning the prospective ratings.

These non-credit risks include those associated with the timing of principal prepayments and prepayment penalties. Yasuda Trust and Banking Co., Ltd. is a property trustee and The Fuji Bank is a loan administrator on the transaction.

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