From the WSJ:
Real-estate investors aren't the only ones feeling the pain. Many big banks issued short-term loans to buyers and planned to sell them off later, much the way they do with loans made to private-equity buyout shops. But the banks have gotten stuck with an estimated $65 billion in fixed- and floating-rate loans on their books, according to J.P. Morgan. Some of the largest issuers have been Lehman Brothers Holdings Inc., Credit Suisse Group and Wachovia Corp.
Lehman has said that about half of the $79 billion in mortgage debt it was holding at year-end is CMBS-related. Wachovia and Credit Suisse declined to comment.
From Barron's:
Moody's recently revealed that its market share in commercial mortgage-backed securities had dropped from 75% to 25%. Why? Issuers apparently were retaliating for its tightened rating standards in the wake of the subprime debacle. Radian (RDN), a mortgage and bond insurer, dumped Fitch this year after the firm had downgraded the rating on Radian's financial-guaranty business below the single-A that the other rating agencies had delivered.
From the 12-21-07 AP:
SYDNEY, Australia — Moody's Investors Services said Friday it may downgrade $773 million in bonds issued by Centro Shopping Centre Securities Ltd., just days after the Centro Properties Group cut earnings forecasts on its exposure to the U.S. subprime mortgage crisis...
Shares of Centro plunged almost 90 percent the first two days of the week before recovering Wednesday and Thursday. Friday the shares lost 15 percent to close at 1.12. Australian dollars (96 cents).
Here's a list of Centro NC properties. The only GSO exposure is Wendover Place on Bridford.
From Business Wire:
Following its monthly surveillance review, Fitch Ratings has identified 33 of its U.S.CMBS deals as 'Under Analysis', indicating that Fitch will be issuing a rating action within 30 days. Approximately 440 U.S. CMBS deals were designated with a SMARTView date of Dec. 24, 2007, indicating that no immediate action is necessary.
From Jesse Eisinger at Portfolio:
Just as with residential mortgages, Wall Street banks package commercial-real-estate loans, slicing them up into tranches according to risk and parceling them out to a range of investors. In 1995, $15.7 billion worth of commercial-mortgage-backed securities were issued. Through the third quarter of 2007, $196.9 billion was issued, according to Commercial Mortgage Alert, a trade publication. That amount means 2007 will be a record year, even though issuance collapsed in the fourth quarter as investors panicked over the credit crunch. Right now, there is about $730 billion in commercial-mortgage-backed securities outstanding. "Not only have we been in a rising tide, but the loans are very different in underwriting standards than even five or 10 years ago," says Alan Todd, head of commercial-mortgage-backed-securities research at J.P. Morgan. "We haven't been through a cycle yet" with these new structures, he adds ominously...
Through the first nine months of 2007, Wachovia was by far the top contributor of loans in the commercial-real-estate-structures business, followed by Lehman, Credit Suisse, Morgan Stanley, and J.P. Morgan, according to Commercial Mortgage Alert. Now the firms are sitting on those loans, waiting to unload them. "The problem is there are no buyers. Nobody wants to take a really big loss and jump the gun too quickly," an investment professional at a commercial-real-estate investment trust told me. "There's a game of chicken going on."
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