Class A through F and Class X Notes affected
Tokyo, December 22, 2010 -- Moody's Japan K.K has today downgraded its ratings on the Class
A through F and Class X notes issued by Godo Kaisha Orso Funding CMBS
6.
In addition, Moody's continues to review for possible further
downgrade on the Class A through F and Class X notes.
The complete rating actions follow.
Class A, Downgraded to Aa3 (sf) from Aaa (sf) and Remains On Review
for Possible Downgrade; previously on Nov 25, 2010 Aaa (sf)
Placed Under Review for Possible Downgrade
Class B, Downgraded to A3 (sf) from Aa3 (sf) and Remains On Review
for Possible Downgrade; previously on Nov 25, 2010 Aa3 (sf)
Placed Under Review for Possible Downgrade
Class C, Downgraded to Ba1 (sf) from Baa1 (sf) and Remains On Review
for Possible Downgrade; previously on Nov 25, 2010 Baa1 (sf)
Placed Under Review for Possible Downgrade
Class D, Downgraded to B1 (sf) from Ba1 (sf) and Remains On Review
for Possible Downgrade; previously on Nov 25, 2010 Ba1 (sf)
Placed Under Review for Possible Downgrade
Class E, Downgraded to Caa2 (sf) from B2 (sf) and Remains On Review
for Possible Downgrade; previously on Nov 25, 2010 B2 (sf)
Placed Under Review for Possible Downgrade
Class F, Downgraded to Caa3 (sf) from B3 (sf) and Remains On Review
for Possible Downgrade; previously on Nov 25, 2010 B3 (sf)
Placed Under Review for Possible Downgrade
Class X, Downgraded to Aa3 (sf) from Aaa (sf) and Remains On Review
for Possible Downgrade; previously on Nov 25, 2010 Aaa (sf)
Placed Under Review for Possible Downgrade
Deal Name: Godo Kaisha Orso Funding CMBS 6
Class: Class A through F and Class X
Issue Amount (initial): JPY 29.9 billion
Dividend: Floating
Issue Date (initial): March 19, 2007
Final Maturity Date: November, 2013
Underlying Asset (initial): Two non-recourse loans and four
TMK bonds and cash
Originator: Bear Stearns Japan, Ltd. Tokyo Branch (as
of the issue date)
Arranger: Bear Stearns Japan, Ltd. Tokyo Branch (as
of the issue date)
Godo Kaisha Orso Funding CMBS 6, effected in March 2007, represents
the securitization of two non-recourse loans and four TMK bonds.
The Originator transferred six loans and TMK bonds in total to the Issuer
and issued the Class A through F and Class X notes. The notes were
sold to investors. The notes are rated by Moody's.
In this transaction, redemptions of the notes are made on a pro-rata
basis, such as payments at maturity and prepayments resulting from
refinancing. Sequential payments from the most senior class of
the notes are applied in the event of loan defaults and fast pay by the
breach of the triggers. Losses incurred by any defaulted loans
are allocated in reverse sequential order, and starting with the
most subordinate class of the notes.
The transaction is backed by four TMK bonds. Five properties remain:
an office/residential complex and a business hotel in Tokyo; two
residential properties in Yokohama and Osaka; and a full-service
hotel in Oita prefecture.
One TMK bond backed by a residential property in Osaka is expected to
be fully redeemed by the sale of the property.
RATINGS RATIONALE
The current rating action and review reflect the following factors:
1) One TMK bond (30.1 % of initial balance) is backed by
an office/residential complex in central Tokyo. According to the
Servicer report, a main office tenant -- which occupied
35% of the net rentable area -- has vacated the building and
the asset manager is currently leasing the property. Moody's
is concerned about the recovery from the property when it is sold after
transferred under special servicing; therefore, Moody's
re-assessed its recovery stress assumptions, lowering them
approximately 37% from its initial assumptions.
2) One TMK bond (9.1 % of initial balance) is backed by
a residential property in Yokohama. Moody's is concerned
about the recovery from the property when it is sold after transferred
under special servicing; Moody's therefore re-assessed
its recovery stress assumptions, lowering them approximately 21%
from its initial assumptions.
3) In light of Moody's re-assessment, losses on the
remaining balance of the TMK bond in 1) above are highly likely and could
affect the Class E and F notes negatively.
4) One specified bond (17.1% of initial balance) is backed
by a business hotel in Tokyo and a full-service hotel in Oita prefecture.
The hotel operator has changed since May 2009; however; the
hotel's performance -- such as occupancy rates,
among others -- has been flagging. Moody's
is in the process of confirming its operating status and the prospects
for refinancing, and will decide on the ratings of Class A through
F and Class X after reviewing its recovery assumptions for the 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.
In addition, Moody's publishes a weekly summary of structured finance
credit, ratings and methodologies, available to all registered
users of our website, at www.moodys.com/SFQuickCheck.
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 Trustee
Reports, Servicer Reports, Property Management Reports.
Information sources 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.
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Moody's downgrades/continues review of Godo Kaisha Orso Funding CMBS 6 (CMBS) for possible downgrade