Moody’s Reviews $3bn of Credit Suisse CMBS for Downgrade

Moody’s Investors Service placed 64 classes from four commercial mortgage-backed securities (CMBS) transactions on review for possible downgrade on exposure to loans sponsored by Babcock & Brown Ltd. (BBL). The reviews affect approximately $3bn of Credit Suisse Commercial Mortgage Trust (CSCMT) structured securities. Four of the five BBL-sponsored portfolios reside in special servicing on 30-day delinquencies, indicating likely losses that will affect the CMBS deals. All of the loans are backed by geographically diverse multifamily properties — usually older Class-B and -C properties — and are encumbered by mezzanine debt, Moody’s said. Credit uncertainty within BBL triggered the reviews, as loans representing “a material share” of outstanding balances within the deals are facing review on possible or anticipated losses. Last week, BBL’s creditors voted to liquidate the company, Moody’s said. “According to information provided on BBL’s web site, this is not expected to have any material impact on the main operating and asset owning entity, Babcock & Brown International Pty Ltd,” Moody’s said. “BIBIPL will continue to operate and will proceed with the orderly realization of assets over an approximate two to three year time horizon to reduce debt.” Moody’s will study the progress of the BBL liquidation and potential losses on specially serviced loans, as well as the performance of the overall pool, when reviewing the affected classes. Write to Diana Golobay.