After four consecutive months of decline, delinquencies for U.S. commercial real estate loan collateralized debt obligations (CREL CDOs) rose slightly last month, according to the latest index results from Fitch Ratings.
CREL CDO late-pays rose to 12% from 11.6% in August. CREL CDO asset managers reported approximately $60 million in realized losses last month.
During September, asset managers reported 11 new delinquent assets consisting of three matured balloon loans, six new credit impaired securities, and two term defaults. Partially offsetting the new delinquencies were six removed assets, which included one real estate owned asset, which was sold at 38% of par; one mezzanine loan that was foreclosed out at a total loss; and four formerly credit impaired commercial mortgage-backed securities.
‘Given the instability in the broader economy, CREL CDOs delinquencies are expected to continue to seesaw going forward,’ says Stacey McGovern, director of Fitch Ratings.