Loan delinquencies on US commercial mortgage backed securities posted a record 52bps increase to 5.42 per cent in January, according to Moody’s. In December, the rate was 4.5 per cent.
The rating agency said the increase in the delinquency rate was the largest thus far in the ongoing downturn:
Four hundred nine loans became newly delinquent in January, adding more than $3 billion to the delinquent balance…We continue to expect loan performance to deteriorate further in 2010.
On a sectoral basis, retail loans – which account for 30 per cent of the total outstanding balance of deals tracked by Moody’s – accounted for nearly 40 per cent of the newly delinquent loans in January, with a delinquency rate of 5.24 per cent.
But the hotel sector recorded the highest delinquency rate by property type, increasing 75bps versus the previous month to reach 9.82 per cent, Moody’s said.
And to put all of this in perspective, one needs only to refer to the recent report on commercial real estate published by the Congressional Oversight Panel, which warned:
‘The most serious wave of commercial real estate difficulties is just now beginning’
And on the European front, Moody’s noted in its fourth quarter EMEA surveillance review that the broader European commercial real estate remained under pressure, leading to continued deterioration in regional CMBS.
The rating agency expected the deterioration to continue throughout the coming quarters due primarily to continued high rates of tenant default and a challenging funding climate.
Hold on to your (tin) hats.
Related links:
Delinquent CMBS, the `C’ stands for climbing – FT Alphaville
Some CMBS datapoints – FT Alphaville