Fitch Puts 188 CMBS Tranches on Watch

Fitch Ratings has placed 188 tranches from 18 commercial mortgage-backed securities deals, representing $8.4 billion in total, on rating watch negative, following a review in its surveillance methodology. The New York credit rating agency said that this has been done since Fitch expects higher defaults and losses on CMBS going forward. The deals impacted include $928 million of commercial real estate collateralized debt obligations (CRE CDOs) that are already on rating watch negative. Of the bonds placed on watch, $3.2 billion represent tranches currently rated AAA. Susan Merrick, managing director and head of Fitch's U.S. CMBS group, noted, "Recent headline defaults such as Centro and MBS support Fitch's prediction for CMBS defaults at least doubling in 2008."