Fitch: U.S. CMBS Loan Profiles Undergoing Post-Closing Updates
OREANDA-NEWS. Requests are on the rise by borrowers looking to change the terms of their U.S. CMBS loan shortly after a deal comes to market, according to Fitch Ratings in its latest weekly U.S. CMBS newsletter.
Had they been known by Fitch prior to issuance, some of the proposed changes would have meant the loan being modelled differently, and often more conservatively. Fitch has seen approximately fifteen requests this year for rating confirmations pertaining to loans from 2014 or 2015 vintage deals. Among them are some that have contemplated fundamental changes to loan terms.
One such request, and one that Fitch is especially concerned with, is the borrower trying to add more debt. Additional debt would cause Fitch to assign a higher probability of default and resulting higher expected loss in our modeling of the loan. Unless the loan had experienced increased cash flow and amortization, Fitch would be unlikely to say that a downgrade would not be warranted.