Total issuance of U.S. commercial mortgage-backed securities is likely to surpass $200 billion this year, and issuance is expected to rise 20% to $240 billion in 2007, according to Fitch Ratings.The rating agency said it expects transactions securitized this year to be more susceptible to economic downturns than other CMBS vintages because they have a higher concentration of more volatile property types and interest-only loans, and also because of the more competitive lending environment this year. The number of CMBS fusion transactions exceeding $3.5 billion has also increased this year, and the trend toward larger fusion deals is expected to continue. "Fitch has already seen five $3.5-plus billion deals through the first nine months of this year, and expects a total of nine such deals by year-end, compared to five in 2005," said Patty Bach, a Fitch senior director. Fitch expects the percentage of interest-only loans in multiborrower transactions to continue to rise in 2007. Fitch also said it expects performance of retail and industrial properties to remain stable in 2007, while office, multifamily, and hotel properties are expected to show improvement. Fitch can be found online at http://www.fitchratings.com.

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