Bangkok--1 Dec--Moody's
Moody's Investors Service says in a new report that Singapore CMBS transactions are enjoying strong cash flow from their underlying properties. With two transactions needing to be refinanced in 2010 and the economy showing signs of gradual improvement, Moody expects they will be able to obtain the necessary funding by their expected maturity dates.
According to the quarterly report, entitled, "Singapore CMBS 3Q2009 Performance Review", most transactions enjoy at least 4 times actual debt service coverage ratio, and appraisers' loan-to-value ratios are in the 16-32% range.
"Singapore's office sector is under pressure as there is an abundantsupply of office space in the core central business district coming onstream in 2010 and 2011," says Marie Lam, a Moody's VP/Senior Credit Officer and co-author of the report.
"However, this is not expected to have a large negative impact on the CMBS transactions as leases that are due for renewal were contracted a few years ago when the rents were still low. Hence, there is a healthy cushion for rental deterioration," says Lam.
Singapore's industrial building sector is also under pressure because of the large availability of industrial space. It is further exacerbated by the dampened demand from the manufacturing sector which was still shedding jobs in 3Q2009. While there will be pressure on those leases in the CMBS transaction which are due for renewal, the impact will not be substantial as the influence of the high-tech buildings, whose rental and occupancy rates have been hit hard, does not play a significant role in the transaction, says the report.
"In the retail sector, the take-up in retail space has been healthy. With confidence gradually coming back, we expect rental rates to stay at around the current level without any drastic downward pressure, " says Jerome Cheng, a Moody's VP/Senior Credit Officer and co-author of the report.
"Suburban malls may even see higher than current rents and lower than current vacancy rates as some of them are gradually completing asset enhancement work," adds Cheng.
Moody's is also reviewing the liquidity sufficiency of the outstanding CMBS transactions to ensure investors get paid on a timely basis in case of any cash flow disruption. A request for comments was published on 16 November 2009, and the rating agency will collect comments through email address
[email protected] until 16 December 2009. The report, which is part of Moody's efforts to provide more information and transparency to the Singapore CMBS market, is now available at www.moodys.com .
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Hong Kong
Jerome Cheng
VP - Senior Credit Officer
Structured Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077
Hong Kong
Marie Lam
VP - Senior Credit Officer
Structured Finance Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 3551-3077