Moody's Investors Service has published a report explaining its approach to assessing the risks of U.S. collateralized debt obligations backed by the debt of real estate investment trusts.CDOs backed by REIT trust securities or subordinate debt are "the newest phase in the continued expansion of the $30 billion trust preferred market," Moody's said. "The TRUPs space also includes transactions backed by bank and insurance sector assets." In the report, titled "Moody's Approach to Rating U.S. REIT CDOs," Moody's said its rating approach to REIT CDOs is an extension of its methodology for CDOs backed by bank and insurance TRUPs. REIT CDOs are important sources of funding for small to midsize REITs that have had limited access to the capital markets, the rating agency said. REIT TRUPs are typically nonamortizing, with 30-year maturities and five- or 10-year noncall periods, while subordinate REIT securities are generally nonamortizing and usually have maturities of 10 to 20 years, Moody's said. The rating agency can be found online at http://www.moodys.com.

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