Moody's: Short War Won't Hurt Most Hotel Ratings

Moody's Investors Service says the ratings of most large lodging corporations and commercial mortgage-backed securities should hold if the war in Iraq is short, although certain highly leveraged hotel companies and real estate investment trusts "could come under more rating pressure."Bill Fahy, a Moody's analyst for speculative-grade hotels, cautions that even a short conflict will affect hotels' operating performance in the near term, and that maintaining adequate liquidity is crucial. Another analyst, E.J. Park of the rating agency's CMBS group, said a brief war "will not have a significant impact on CMBS deals that we rate." However, "a prolonged military conflict or any additional terrorist attacks on U.S. soil may have negative credit implications, as hotels have been under stress for the last two years," he said. In the lodging REIT sector, the REITs are "overall below investment grade" and have about $9 billion of rated debt outstanding, Moody's said. Lesia Bates Moss, a Moody's REIT analyst, said most lodging REITs' credit ratings and profits are weak, and therefore "a prolonged ailing economy and long war would result in further downward pressure on credit ratings." Moody's can be found online at http://www.moodys.com.