Standard & Poor’s announced late yesterday that, in connection with the advanced notice of proposed criteria change, they will not currently assign ratings to transactions that are based on the U.S. conduit/fusion criteria.

Among the deals cited is the recent Goldman Sachs. and Citigroup Global Markets called GS Mortgage Securities Trust 2011-GC4, which was withdrawn from the market yesterday on the back of the S&P news, according to a Bloomberg report.

S&P said it has halted ratings to CMBS deals because of the discovery of potentially conflicting methods to calculate debt service coverage ratios (DSCRs).

Prior to 2011, DSCRs used in the criteria were based on the worse of actual debt service amounts and loan constants, Royal Bank of Scotland analysts said. Starting around January 2011, S&P started using a simple average of the two methods in the analysis of new deals, but surveillance continued to use the earlier approach.

S&P stated yesterday that the review might result in multiple technical changes to the conduit/fusion CMBS criteria. Furthermore, because of the early stage of the review, the potential impact on outstanding ratings is uncertain.


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