...Property Quality a Focus in 2013: A year ago, Fitch published a report outlining its concerns over the direction large loan CMBS was taking (see report under Related Research at left). In 2013, Fitch's concerns focused on the fact that average quality properties were receiving trophy-quality treatment, resulting in credit enhancement that was insufficient to achieve `AAAsf' ratings. Debt Level, The New Risk: In 2014, the risks have shifted but still remain prevalent in several transactions issued over the past five months. Instead of property quality, the primary risk in large loan transactions issued in 2014 is the absolute level of debt. Subordinate Enhancement Often Insufficient: Specifically, Fitch is concerned that ratings of `BBB-sf' through `Bsf' on a substantial number of 2014 large loan transactions are not warranted given the significant amount of debt at those ratings. Fitch's wariness is further reinforced by the amounts of additional debt, subordinate to the first mortgage,...
