Seven classes of trust certificates affected
Tokyo, February 24, 2011 -- Moody's Japan K.K. has today confirmed/downgraded the ratings
on the Class A through X Trust Certificates issued by JLOC XXX and the
Class 1 through 2 Trust Certificates issued by JLOC XXX Satellite Trust.
Details follow:
Class A, downgraded to Baa2 (sf); previously, on January
13, 2011, A2 (sf) placed under review for possible downgrade
Class B, downgraded to Ba3 (sf); previously, on January
13, 2011, Baa3 (sf) placed under review for possible downgrade
Class C, downgraded to B3 (sf); previously, on January
13, 2011, Ba3 (sf) placed under review for possible downgrade
Class D, downgraded to Caa3 (sf); previously, on January
13, 2011, Caa1 (sf) placed under review for possible downgrade
Class 1 and Class 2, confirmed at Caa3 (sf); previously,
on January 13, 2011, Caa3 (sf) placed under review for possible
downgrade
Class X, downgraded to Baa2 (sf); previously, on January
13, 2011, A2 (sf) placed under review for possible downgrade
Deal Name: JLOC XXX Trust/ JLOC XXX Satellite Trust
Class: Class A through X Trust Certificates (JLOC XXX Trust),
Class 1 and Class 2 Trust Certificates (JLOC XXX Satellite Trust)
Issue Amount (initial): JPY 333.8 billion (JLOC XXX Trust),
JPY 9.3 billion (JLOC XXX Satellite Trust)
Dividend: Floating/Fix
Issue Date: May 9, 2006
Final Maturity Date: April, 2014
Underlying Asset (initial): Five TMK bonds and JLOC XXX Trust Certificate
backed by properties (JLOC XXX Trust), One TMK bond baked by properties
(JLOC XXX Satellite Trust)
Originator: Morgan Stanley Japan Securities Co., Ltd.
(as of the issue date)
Arranger: Morgan Stanley Japan Securities Co., Ltd.
(as of the issue date)
JLOC XXX Trust, affected in May 2006, represents the securitization
of five TMK bonds and the JLOC XXX Satellite Trust Certificates.
The JLOC XXX Satellite Trust, effected in May 2006, represents
the securitization of one TMK bond.
The originator transferred one TMK bond to the issuer trust, which
issued the Class 1 through 2 Trust Certificates and then sold them to
investors (JLOC XXX Satellite Trust).
Also, the originator transferred five TMK bonds and one Trust Certificate
to the issuer trust, which issued Class A through X Trust Certificates
and then sold them to investors (JLOC XXX Trust). These trust certificates
are rated by Moody's.
This transaction constitutes a multi-borrower CMBS backed by six
Bonds that were respectively issued by different TMKs. The trust
vehicle is designed to use interest and principal collections from the
Bonds separately to pay dividend/principal on the rated Trust Certificates.
Four of the bonds have been paid down in full, and the transaction
is currently secured by two bonds. One of the two is a liquidating
bond backed by office buildings; the other (non-liquidating)
bond is backed by hotels.
According to the Asset Disposition Report dated December 27, 2010,
for the bond backed by hotels, the individual target sales prices
were changed and the backing properties are scheduled to be sold at substantially
lower prices than the previous targets.
RATING RATIONALE
The recovery of a bond backed by hotels and under special servicing may
well be lower than Moody's assumptions in June 2010 (the last rating
action on these trust certificates), as the individual target sales
prices were changed and the backing properties are scheduled to be sold
at substantially lower prices than the previous targets.
Moody's has thus re-assessed and lowered by 43% (from
its initial estimates) its recovery assumptions.
In this rating action, Moody's has not changed the recovery
of a TMK bond backed by office properties. A part of Class A Trust
Certificate -- which was corresponded to TMK bond backed by office
properties -- was redeemed because of the disposal of many
backing properties.
The principal methodology used in this rating was "Updated: Moody's
Approach to Rating CMBS Transactions in Japan" (June 2010) published on
September 30, 2010, and available on www.moodys.co.jp.
Moody's did not receive or take into account any third party due diligence
reports on the underlying assets or financial instruments related to the
monitoring of this transaction in the past six months.
REGULATORY DISCLOSURES
For an explanation of the (sf) indicator, please see "Moody's Structured
Finance Rating Scale" on www.moodys.com.
The principal information used to prepare the credit rating included the
asset disposition report, and special servicer and trustee reports.
Information used to prepare the credit rating came the following:
parties involved in the ratings (such as the arranger), parties
not involved in the ratings (such as the servicer), public information,
confidential and proprietary Moody's information.
Measures taken to ensure the quality of this information include preparation
or reviews by a third party.
Moody's considers the quality of information available on the issuer or
obligation satisfactory for the purposes of maintaining a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Credit ratings are Moody's current opinions of the relative future credit
risk of entities, credit commitments, or debt or debt-like
securities. 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. Credit
ratings do not address any other risk, including but not limited
to: liquidity risk, market value risk, or price volatility.
Credit ratings do not constitute investment or financial advice,
and credit ratings are not recommendations to purchase, sell,
or hold particular securities. No warranty, express or implied,
as to the accuracy, timeliness, completeness, merchantability
or fitness for any particular purpose of any such rating or other opinion
or information is given or made by Moody's in any form or manner whatsoever.
The credit risk of an issuer or its obligations is assessed based on information
received from the issuer or from public sources. Moody's may change
the rating when it deems necessary. Moody's may also withdraw the
rating due to insufficient information, or for other reasons.
Moody's Japan K.K. is a credit rating agency registered
with the Japan Financial Services Agency and its registration number is
FSA Commissioner (Ratings) No. 2. The Financial Services
Agency has not imposed any supervisory measures on Moody's Japan K.K.
in the past year.
Please see ratings tab on the issuer/entity page on the Moody's website
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Credit Ratings were fully digitized and accurate
data may not be available. Consequently, Moody's provides
a date that it believes is the most reliable and accurate based on the
information that is available to it. Please see the ratings disclosure
page on the Moody's website for further information.
Please see the Credit Policy page on the Moody's website for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Tokyo
Kiyosei Sugioka
Analyst
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Tokyo
Koji Kumamaru
MD - Structured Finance
Structured Finance Group
Moody's Japan K.K.
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Moody's Japan K.K.
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Tokyo 105-6220
Japan
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Moody's confirms/downgrades JLOC XXX Trust and JLOC XXX Satellite Trust