The downgrades are due primarily to higher expected realized and anticipated losses from specially serviced and troubled loans, according to Moody’s.
The company’s affirmations of the principal classes are due to parameters that include Moody's loan-to-value ratio, Moody's stressed debt service coverage ratio and the Herfindahl Index—a measure of loan level diversity—remaining within acceptable ranges. Based on Moody’s current base expected loss, the credit enhancement levels for the affirmed classes are sufficient to maintain their current ratings.
Moody's rating action reflects a base expected loss of approximately 8.1% of the current deal balance. At last review, Moody's base expected loss was approximately 7.8%. Its base expected loss plus realized losses figure has increased to 12.5% of the original balance, up from 9.9% at its last review.