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PLEASE READ AND SCROLL DOWN!

 

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

 

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Rating Action:

MOODY'S DOWNGRADES ELEVEN AND CONFIRMS TWO SINGLE ASSET AND LARGE LOAN CMBS TRANSACTIONS CITING TERRORISM INSURANCE CONCERNS

27 Sep 2002
MOODY'S DOWNGRADES ELEVEN AND CONFIRMS TWO SINGLE ASSET AND LARGE LOAN CMBS TRANSACTIONS CITING TERRORISM INSURANCE CONCERNS Moody's Investors Service downgraded the ratings of all of the Aaa classes and some of the Aa classes of eleven commercial mortgage-backed transactions due to the lack of, or inadequacy of terrorism insurance, and the likelihood that these conditions will continue. Moody's had placed each of these classes' ratings on watch for possible downgrade on May 31, 2002, citing concerns about terrorism insurance coverage. Moody's also affirmed the Aa ratings of classes of two of these eleven transactions, and affirmed the Aaa ratings of classes of two other commercial mortgage-backed transactions that had also been put on watch for possible downgrade.


Over one year has passed since the terrorist attacks of September 11, 2001. In the interim, federal backstop legislation has been actively debated in the U.S. Congress, and separate bills have been passed by each of the House and the Senate. However, given the lack of conference committee deliberations, Moody's currently sees a low likelihood of emergence from Congress of a bill that would prompt greater availability of terrorism insurance.


The market for terrorism insurance remains highly dysfunctional, and we are not aware of any credible private market initiatives to remedy the situation. Moody's concurs with U.S. federal authorities who have repeatedly stated that terrorism is not a trivial risk and will remain so for the foreseeable future. As such, this level of risk, and the unpredictability of terrorism insurance availability to hedge this risk, is incompatible with the highest levels of Moody's ratings for certain CMBS transactions.


Owners of some of the properties securing the affected CMBS transactions have obtained limited terrorism insurance coverage, have increased building security, and have made structural improvements to help mitigate the effects of a terrorist attack. The differing downgrades from transaction to transaction reflect these nuances. Nevertheless, the commendable actions of some of the property owners cannot completely erase the risk of catastrophic loss that must be factored into the appropriateness of the high investment-grade ratings of Aaa and Aa.


The insurance policies that have been obtained typically have one or more limitations or weaknesses. These include:

· Coverage under a blanket policy that can include other high-risk assets, with relatively low aggregate annual claims limits.

· Policy carveouts for biological, chemical and radiological attacks.

· Named-perils coverage rather than all-risk terrorism coverage.

· Coverage for considerably less than the loan amount.

· Policies written by companies with low investment grade ratings or with no rating at all.

· Policies with 30 or 60 day cancellation clauses.

· Layers of insurance with differing coverage wording, allowing coverage "gaps."


The rating actions for single asset transactions range from an affirmation to a downgrade of three notches at the Aaa level and from affirmation to a one notch downgrade at the Aa level, reflecting these transactions' event-risk and volatility, and the high-profile nature of the collateral. The rating actions range from an affirmation to a one notch downgrade at the Aaa level for pooled transactions, reflecting the benefits of pooling and diversity in dampening volatility, notwithstanding that some assets in a pool may be relatively high-profile. The downgrade differences among the single asset deals resulted from consideration of the various factors described above (e.g., the quality or weaknesses of the insurance policies; any pro-active measures by the property owners) that Moody's identified in its investigation of each transaction. One of the original fourteen transactions watchlisted for downgrade, Banc of America Large Loan, Series 2001-1166, has paid off.


The ratings downgraded include:


280 Park Avenue Trust, Commercial Mortgage Pass-Through Certificates, Series 2001-XL280

-Class A-1, $31,712,339, Fixed, downgraded to Aa1 from Aaa

-Class A-2, $56,344,000, Fixed, downgraded to Aa1 from Aaa

-Class A-2F, $73,000,000, Floating, downgraded to Aa1from Aaa

-Class X-1, $265,861,666, Notional, downgraded to Aa1from Aaa

-Class B, $31,000,000, Fixed, downgraded to Aa3 from Aa2


1211 Avenue of the Americas Trust, Commercial Mortgage Pass-Through Certificates, Series 2000-1211

-Class A, $141,300,000, Fixed, downgraded to Aa1 from Aaa

-Class B, $45,000,000, Fixed, confirmed at Aa2


1251 Avenue of the Americas, Commercial Mortgage Pass-Through Certificates, Series 1999-XL1251

-Class A-1, $43,563,533, Fixed, downgraded to Aa2 from Aaa

-Class A-2, $188,000,000, Fixed, downgraded to Aa2 from Aaa

-Class X, $344,763,533, Notional, downgraded to Aa2 from Aaa

-Class B, $60,400,000, WAC, downgraded to Aa3 from Aa2


1345 Avenue of the Americas Trust, Commercial Mortgage Pass-Through Certificates, Series 2000-XL1345

-Class A-1, $40,032,888, WAC, downgraded to Aa1 from Aaa

-Class A-2, $233,365,781, WAC, downgraded to Aa1 from Aaa

-Class X, $443,398,669, Notional, downgraded to Aa1 from Aaa

-Class B, $50,900,000, WAC, downgraded to Aa3 from Aa2


Columbia Center Trust, Commercial Mortgage Pass-Through Securities, Series 2000-CCT

-Class A, $114,580,000, Floating, downgraded to Aa1 from Aaa

-Class B, $22,920,000, Floating, confirmed at Aa2

-Class X1, $195,000,000, Notional, downgraded to Aa1 from Aaa


COMM 2001-J2 Mortgage Trust, Commercial Mortgage Pass-Through Certificates

-Class A-1, $293,504,583, Fixed, downgraded to Aa1 from Aaa

-Class A-1F, $30,022,589, Floating, downgraded to Aa1 from Aaa

-Class A-2, $405,000,000, Fixed, downgraded to Aa1 from Aaa

-Class A-2F, $420,000,000 Floating, downgraded to Aa1 from Aaa

-Class X, $516,378,404, Notional, downgraded to Aa1 from Aaa

-Class XP, $542,798,911, Notional, downgraded to Aa1 from Aaa

-Class XC, $967,894,100, Notional, downgraded to Aa1 from Aaa


Four Times Square Trust, Commercial Mortgage Pass-Through Certificates, Series 2000-4TS

-Class A-1, $38,892,609, Fixed, downgraded to Aa3 from Aaa

-Class A-2, $233,000,000, Fixed, downgraded to Aa3 from Aaa

-Class X, $421,892,609, Notional, downgraded to Aa3 from Aaa

-Class B, $46,000,000, Fixed, downgraded to A1 from Aa2


GS Mortgage Securities Corporation II, Floating Rate Commercial Mortgage Pass-Through Trust, Series 2000-GSFL III

-Class A, $154,483,000, Floating, downgraded to Aa1 from Aaa

-Class X1, $291,185,000, Notional, downgraded to Aa1 from Aaa

-Class X2, $291,185,000, Notional, downgraded to Aa1 from Aaa

-Class XO, $291,068,526, Notional, downgraded to Aa1 from Aaa


GS Mortgage Securities Securities Corporation II, Commercial Mortgage Pass-Through Certificates, Series 2001-1285

-Class A-1, $75,743,083, Fixed, downgraded to Aa1 from Aaa

-Class A-2, $168,000,000, Fixed, downgraded to Aa1 from Aaa

-Class X-1, $365,993,083, Notional, downgraded to Aa1 from Aaa

-Class B, $47,500,000, Fixed, downgraded to Aa3 from Aa2


GS Mortgage Trust II, Floating Rate Commercial Mortgage Pass-Through Trust, Series 2001-GSFL IV

-Class A, $189,609,149, Floating, confirmed at Aaa

-Class B, $14,731,660, Floating, confirmed at Aaa

-Class X-2, $231,973,702, Notional, confirmed at Aaa


GS Mortgage Securities Corporation II, Commercial Mortgage Pass-Through Certificates, Series 2001-ROCK

-Class A-1, $108,130,000, Fixed, downgraded to Aa2 from Aaa

-Class A-2, $492,470,000, Fixed, downgraded to Aa2 from Aaa

-Class A-2FL, $115,000,000, Variable, downgraded to Aa2 from Aaa

-Class X-1, $1,210,000,000, Notional, downgraded to Aa2 from Aaa

-Class X-2, $1,210,000,000, Notional, downgraded to Aa2 from Aaa

-Class B, $102,100,000, Fixed, downgraded to Aa3 from Aa2

-Class B-FL, $50,000,000, Variable, downgraded to Aa3 from Aa2


Host Marriott Pool Trust, Commercial Mortgage Pass-Through Certificates, Series 1999-HMT

-Class A, $164,137,868, Fixed, downgraded to Aa1 from Aaa

-Class B, $174,862,895, Fixed, downgraded to Aa1 from Aaa


Sun America Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 1999-C2B

-Class B-1, $7,500,000, Fixed, confirmed at Aa3


Moody's will continue to closely follow terrorism insurance developments at the federal and state levels and in the insurance and real estate industries. If federal legislation relating to terrorism insurance is passed and the response of the insurance industry to it is positive, or if a private sector initiative emerges that is helpful, Moody's will weigh these developments in any future rating actions of existing transactions and in the ratings of new transactions. Moody's will also consider any additional insurance or security programs put into place by the borrowers.

No Related Data.
© 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

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To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

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Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’s Investors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY100,000 to approximately JPY550,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​
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