Thursday, February 5, 2009

Run for the Hills!!!! AAA Downgrades are coming...

Not sure if that is Tad Philipp enjoying his new found freedom on the buy side, or Nick Levidy chasing a couple of the weaker AAA broads bonds through the valley as he thins the herd.

Moody's is going to whack AJs down half a dozen notches over the next couple of months according to a release to day.
the junior Aaa-rated classes, to be downgraded by four to five notches on average.

Expect losses of just 5% on average (seems low).
Moody's generally rated conduit and fusion transactions from 2006 through 2008 to an expected loss of about 2%, but now expects that deals from these vintages will experience losses of approximately 5% on average.

Credit problems on the horizon? Who'da'thunk...
"Early in the current economic crisis, our biggest concern was the impact of a liquidity crunch on commercial real estate," says Moody's Senior Vice President, Michael Gerdes. "However, Moody's now expects a significant overall decline in property cash flows as a result of a higher incidence of tenant defaults and bankruptcies and a sharp decline in lease renewal rates."

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