Class A through D Trust Certificates affected
Tokyo, April 08, 2011 -- Moody's Japan K.K has today downgraded its ratings on the Class
A through D trust certificates issued by JLOC39 Trust.
Details follow:
Class A, downgraded to Aa1 (sf); previously on Jan 19,
2011 Aaa (sf) placed under review for possible downgrade
Class B, downgraded to Baa2 (sf); previously on Jan 19,
2011 A2 (sf) placed under review for possible downgrade
Class C, downgraded to B2 (sf); previously on Jan 19,
2011 Ba2 (sf) placed under review for possible downgrade
Class D, downgraded to Caa3 (sf); previously on Jan 19,
2011 B3 (sf) placed under review for possible downgrade
Deal Name: JLOC 39 Trust
Classes: A through D trust certificates
Issue Amount (initial): JPY 40.3 billion
Dividend: Floating
Issue Date (initial): December 21, 2007
Final Maturity Date: April, 2014
Underlying Asset (initial): 14 specified bonds, a non-recourse
loan, and cash
Originator: Morgan Stanley Japan Securities Co., Ltd.
(as of the issue date)
Arranger: Morgan Stanley Japan Securities Co., Ltd.
(as of the issue date)
The JLOC 39 Trust, effected in December 2007, represents the
securitization of 14 specified bonds and a non-recourse loan (all
hereinafter referred to as the "loans") by issued to ten borrowers.
The transaction is currently secured by seven specified bonds backed by
eight properties, one of which has been placed under special servicing.
The originator entrusted the loans to the asset trustee, and received
the Class A through D trust certificates, which it then sold to
investors. The trust certificates are rated by Moody's.
In this transaction, the loans are divided into two types:
component loans and pooled loans. Component loans are further subdivided
into senior and junior components. The senior component and pooled
loans secure the Class A through D and X trust certificates.
Cash flow allocated to the senior component will be combined with the
cash flow from the pooled loans and used to make the payments on the Class
A through D senior trust certificates sequentially in all the cases of
scheduled amortization, balloon payment at maturity, voluntary
prepayments, and recovery payments from defaulted loans.
The losses by any defaulted loans allocated to the senior trust certificates,
whether from a component or a pooled loan, will be aggregated and
allocated in reverse sequential order, starting with the most subordinate
class of the trust certificates from Class D to Class A trust certificates.
RATINGS RATIONALE
The current rating action reflects the following factors:
1) The recovery from the loans may fall below Moody's assumptions
at the last rating action (February 2010), in light of properties'
operating status, the types of property, and their locations.
Moody's has thus lowered its recovery assumptions by approximately
47% (weighted average) from its initial assumptions.
2) In light of Moody's re-assessment, losses on the
remaining balance of the loans are highly likely and could affect the
Class D trust certificate negatively.
Moody's will continue to monitor the properties' operating
status and the progress of special servicing.
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
Servicer reports, Trustee reports and PM 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
Meishuku Ohno
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.
Atago Green Hills Mori Tower 20fl
2-5-1 Atago, Minato-ku
Tokyo 105-6220
Japan
JOURNALISTS: (03) 5408-4110
SUBSCRIBERS: (03) 5408-4100
Moody's downgrades JLOC 39 (CMBS)