Sarasota Herald-Tribune (FL) (02/27/08); Beck, Rachel
Some Wall Street insiders are concerned that commercial real estate may be the next market thrown into turmoil, pointing to a soaring CMBX index that indicates investors perceive increased risk in commercial mortgage-backed securities. However, Fitch Ratings' Commercial Mortgage-Backed Securities Index shows that actual delinquencies on commercial mortgage bonds were at a scant 0.28 percent at the end of last year. Even if that rate increases, it still would be nowhere near the double-digit default rates now being seen on subprime mortgages. In addition, only 28 percent of commercial mortgages since 1995 are securitized compared to 80 percent of subprime loans. Consequently, the losses on those loans can be recognized more slowly by financial institutions.
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