Class A and X Notes affected
Tokyo, April 22, 2011 -- Moody's Japan K.K. has today upgraded the ratings on the
Class A and X Notes issued by Godo Kaisha JLOC38.
Details follow:
Class A, Upgraded to Aaa (sf); previously on Jun 2, 2009
Downgraded to Aa1 (sf)
Class X, Upgraded to Aaa (sf); previously on Jun 2, 2009
Downgraded to Aa1 (sf)
Deal Name: JLOC 38
Class: Class A through X Notes
Issue Amount (initial): JPY 82.91 billion
Dividend: Floating
Issue Date: September 21, 2007
Final Maturity Date: April, 2016
Underlying Asset (initial): 34 loans backed by real estate
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 38, effected in September 2007, represents the securitization
of 34 loans backed by real estate. The originator transferred the
34 loans to the Issuer SPE, JLOC 38 LLC, which issued the
Class A through D and X Notes (the Senior Notes) and the Class E Notes
(the Junior Notes). The notes were sold to investors.
The Class A through D and X notes are rated by Moody's.
The underlying loans are classified as either component loans or pooled
loans. Component loans are further divided into senior and junior
components. The senior component and pooled loans secure the Class
A through D and X Notes.
The cash flow from the pooled loans will be used solely to pay down the
senior notes.
The cash flow from the component loans will be used to pay down both senior
and junior notes. Scheduled amortizations, balloon payments
at maturity, and voluntary prepayments from a component loan will
be pro-rated based on the outstanding principal balance of each
component (senior and junior component loans). However, cash
flow from a defaulted loan will be allocated first to its senior component
and then to its junior component.
The cash flow allocated to the senior component will be combined with
cash flow from the pooled loans and used to pay down the senior notes
sequentially in all cases of scheduled amortization, balloon payment
at maturity, voluntary prepayments, or recovery from a defaulted
loan.
Twenty of the 34 loans have been paid down in full, while the principal
of one loan suffered partial impairment as a result of special servicing.
The transaction is now backed by 13 loans, three of which are under
special servicing.
RATING RATIONALE
The credit support for the Class A Notes has increased, as some
of the loans have been paid down since last rating action date.
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 upgrades JLOC 38 Notes (CMBS)