S&P: '03 Bad Year for Commercial Mortgages

Last year was the most stressful year for commercial mortgage loans since the early 1990s, according to a Standard & Poor's study of such loans.The rating agency said defaults among S&P-rated commercial mortgage loans originated between 1993 and 2002 reached a total of 399 in 2003. This represents 30% of all S&P-rated mortgage loans that defaulted as of Dec. 31, 2003. However, the study found that credit support levels for existing commercial mortgage-backed securities transactions "are at comfortable multiples of the expected base-case loss." Dr. Joseph Hu, managing director of research in the S&P structured finance group, said the study results "imply that the credit performance of newly originated loans will be more resilient. The base-case loss is also likely to be substantially lower than those of the older vintages." The rating agency can be found online at http://www.standardandpoors.com.