The increased incidence of loan extensions has helped precipitate a slight drop in U.S. commercial real estate loan collateralized debt obligation (CREL CDO) delinquencies, according to the latest index results from Fitch Ratings.
CREL CDO delinquencies fell slightly to 12.8% last month from 12.9% in September. Fifty-eight loan extensions were reported in October, which is significantly higher than the 2010 monthly average of 37 extensions, Fitch says.
‘Many new loan extensions are short-term remedies designed to allow added time for further negotiation of pending loan modifications,’ explains Director Stacey McGovern.
CREL CDO asset managers reported approximately $98 million in realized losses from the disposal of distressed assets in October.
‘The risk still remains for realized losses to increase if real estate trends backpedal, though they have been in a relative holding pattern for the last few months,’ McGovern adds. Total realized losses across the CREL CDO universe total over $1.7 billion (or approximately 7.6% of the collateral balance).
SOURCE: Fitch Ratings