The CMBS market has been running strong for some time, as CMBS deals have, until recently, been considered a relatively cheap means of financing, serving as a popular way to fund buyouts, for example. Yet growth has come at the expense of deal quality. In April, the three rating agencies fired off a set of comments indicating that commercial mortgage underwriting was showing troubling signs of deterioration (Fitch Ratings, for one, predicts that 2007 vintage loans could have a 15% greater default rate than previous years). Culprits include CMBS so highly leveraged that borrowers need additional financing just to handle debt servicing, along with a larger number of poor-quality loans shoehorned into B-pieces of CMBS

conduit deals.

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