Moody’s Finds Collateral Barbell With Lower-Quality Loans, Trophy Assets

Moody’s Investors Service tracked a divergence in collateral quality for conduit commercial mortgage-backed securities deals in the third quarter, with a high volume of lower-quality collateral on one end of the spectrum, large trophy assets on the other and few middle-of-the-road assets in between. “While the issuer subsequently drops most of these [lower-quality] assets, the fact they continue to be originated indicates that flaws remain within the CMBS business model,” Tad Philipp, director of commercial real estate research, told sister publication Real Estate Finance Intelligence.