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Volume 2014 - Number 1

January 10, 2014

Moody’s Critical of AAA Rating from Other Firms On Commercial MBS Deal as Market Heats Up

A commercial MBS issued in late December that received AAA ratings from Fitch Ratings and Standard & Poor’s wouldn’t have been rated higher than A1 by Moody’s Investors Service. Moody’s said the $375 million RBS Commercial Funding Inc. 2013-GSP Trust lacked structural support to obtain the highest ratings. The deal was a single-asset transaction without subordinate classes to absorb expenses that the trust can’t pass along to the borrower. “In cases where a subordinate class is not present to protect highly rated senior investors, some other feature, such as a reserve fund, has been employed to mitigate the risk,” according to Daniel Rubock, a senior vice president at Moody’s. “The GSP Trust lacks any such structural mitigant.” Fitch said...

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