NEW YORK -(Dow Jones)- In a stunning reversal in its evaluation of a clutch of mortgage bonds backed by commercial property, Standard & Poor's Tuesday raised the ratings on several securities it had downgraded just a week ago.
Among the bonds that have been moved back to the top-notch triple-A category from the triple-B minus category are securities that make up the benchmark GG-10 deal.
The ratings firm said it raised the ratings following the implementation of its "recently updated criteria." An S&P spokesman wasn't immediately available for comment.
The upgrade means that these bonds are now eligible for a Federal Reserve program which offers investors cheap loans to buy them.
Market participants said they are confused by S&P's actions.
"Every time they do this, they erode their credibility as a ratings agency," said Derrick Wulf, a senior portfolio manager at Dwight Asset Management in Burlington, Vt.
This is particularly unnerving at a time when the market is seeking stability, said one market participant who declined to be named.
The market for commercial mortgage loans has been struggling, as the economic downturn has led to empty malls and offices. Borrowers have been unable to raise fresh funding or refinance existing loans, increasing defaults.
Tuesday, Federal Reserve Chairman Ben Bernanke said the central bank is closely monitoring the commercial real estate market, given the difficulty borrowers are having to refinance these loans.
-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227; anusha.shrivastava@ dowjones.com
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment