Defaults on commercial mortgage-backed securities have been "extraordinarily low" during the 14-year history of the bonds, according to a study by Fitch Ratings.However, the rating agency says it expects a "gradual rise" in below-investment-grade CMBS defaults as rating agencies change their credit enhancement levels over time. The study compared the performance of CMBS to that of corporate bonds and found that the cumulative overall default rate for CMBS was 0.2% during the period 1990-2003, compared with about 11% for corporate bonds. "Only 41 of the 8,296 classes that make up the collateral in 914 transactions the Fitch study evaluated have defaulted, resulting in, on a dollar basis, an investment-grade default rate of 0.1% and a below-investment-grade default rate of 1.61%," said Mary O'Rourke, a Fitch senior director. Fitch can be found online at http://www.fitchratings.com.

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