CMBS Overdues Hit 7-Year Low

The delinquency rate on U.S. commercial mortgage-backed securities fell to a seven-year low of 0.58% in the first quarter, its lowest level since 1999, according to Standard & Poor's.The delinquency rate also dropped from 0.84% at the end of 2005, according to the rating agency. "Since its peak of 1.96% in December 2003, the delinquency rate has declined 70%, partly due to record volume issuance," said Eric Thompson, a credit analyst/director in S&P's CMBS surveillance group. What he sees as "more telling" is that the actual amount delinquent fell by a substantial 38%. At the end of the first quarter, delinquencies totaled $2.48 billion on a base of $445.7 billion of S&P-rated CMBS, the rating agency reported. "Although it may be too early to call this reversal the start of a longer-term trend, current economic conditions may be starting to shape individual property segment performance," said Larry Kay, a credit analyst/director in S&P's structured finance ratings group. S&P can be found online at http://www.standardandpoors.com.