Moody's fighting talk on structured CMBS

The rating agency announced in April that it would raise the credit enhancement required for US conduits by half a notch to a notch, as a result of decreasing underwriting standards in the sector.

As a result, Moody's said, it found that "ratings shopping is alive and well." Since the application of the adjustment in July, there has been a drop-off in the amount of deals it has been asked to rate - Moody's has not been asked to rate seven of the 10 deals that have come to market, representing the deals with the weakest collateral.

The rating agency also identified the trend of including commercial real estate (CRE) collateralised debt obligation (CDO) paper in CRE CDO portfolios. These CRE CDO squared transactions can have 30% buckets of this sort of asset. As a result, Moody's has increased correlation measures for those assets.

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