Bangkok--2 Mar--Moody's
Moody's states that the minimum liquidity protection for Singapore CMBS transactions should be no less than 6 months Moody's Investors Service says in a new report that the minimum liquidity protection in Singapore CMBS transactions should be sufficient to cover the senior payment obligations of the CMBS issuer for a period equal to the longer of 1) six months or 2) one payment period.
"This minimum liquidity protection is important so that the CMBS issuer can meet its payment obligations in a timely manner," says Jerome Cheng, a Moody's vice president and author of the report, adding, "This minimum liquidity protection is premised on the transaction characteristics, and the legal and operational risks of Singapore CMBS transactions."
The minimum liquidity protection is based on results of 'Request for Comment: Singapore CMBS Liquidity Sufficiency', which was published last November to solicit feedback from market participants.
Actual liquidity protection will be analyzed based on the merits of the individual transaction. "Moody's would consider greater liquidity protection for transactions with more embedded risks," Cheng adds.
"To ensure rating consistency across all Singapore CMBS transactions, these new guidelines are applicable to all the future and existing transactions," Cheng explains, adding, "The rating of a transaction lacking sufficient liquidity will be linked to the rating of the sponsoring S-REIT. The degree of rating linkage will be subject to the existing liquidity arrangement, the S-REIT's profile, and the remaining term to maturity."
After considering the liquidity protection present in the existing deals, Moody's has put three CMBS transactions on review for possible downgrade because of their lack of relevant liquidity reserve, and affirmed the ratings of another three.
The three transactions with ratings on review for downgrade are:
Issuer: Silver Maple Investment Corporation Ltd
....U.S.$72,100,000 Series 018 Floating Rate Notes due December 2011, Aaa
Placed Under Review for Possible Downgrade; previously on Jun 12, 2009
Affirmed Aaa
....U.S.$255,500,000 Series 025 Floating Rate Notes due April 2014, Aaa
Placed Under Review for Possible Downgrade; previously on Jun 12, 2009
Affirmed Aaa
....?175,000,000 Series 030 Floating Rate Notes due April 2014, Aaa
Placed Under Review for Possible Downgrade; previously on Jun 12, 2009
Affirmed Aaa
Issuer: Orion Prime Ltd.
....?186,200,000 Series P1-AAA-001 Class AAA Secured Floating Rate Notes due March 2012, Aaa Placed Under Review for Possible Downgrade;
previously on Aug 25, 2008 Affirmed Aaa
Issuer: Star Topaz Limited
....S$260,000,000 Secured Floating Rate Notes due Jan 2013, Aaa Placed
Under Review for Possible Downgrade; previously on Sep 19, 2006
Definitive Rating Assigned Aaa
The three transactions with ratings affirmed are:
Issuer: Blossom Assets Ltd.
....?80,400,000 Series 1 -- Tranche A Secured Floating Rate Notes due Nov 2012, affirmed Aaa; previously on May 17, 2006 Definitive Rating Assigned
Aaa
....?15,000,000 Series 1 -- Tranche B Secured Floating Rate Notes due Nov 2012, affirmed Aa3; previously on May 17, 2006 Definitive Rating Assigned
Aa3
Issuer: Silver Oak Ltd.
.... U.S.$427,000,000 Class A1 Secured Floating Rate Notes due Sep 2013, affirmed Aaa; previously on Sep 14, 2006 Definitive Rating Assigned Aaa
....?30,000,000 Class A2 Secured Floating Rate Notes due Sep 2013, affirmed Aaa; previously on Sep 14, 2006 Definitive Rating Assigned Aaa
....U.S.$86,500,000 Class B Secured Floating Rate Notes due Sep 2013, affirmed Aa2; previously on Sep 14, 2006 Definitive Rating Assigned Aa2
Issuer: Emerald Assets Ltd.
.... ?197,500,000 Series P1-AAA-002 Secured Floating-Rate Notes due Nov 2015, affirmed Aaa; previously on May 14, 2007 Definitive Rating
Assigned Aaa
Moody's will discuss with the S-REIT sponsors of each of the transactions whose ratings are on review for possible downgrade and analyze the transaction specifics on a deal-by-deal basis. We expect to conclude our rating action within the next three months.
Moody's will continue to monitor any future development of bankruptcy proceedings against S-REITs in Singapore and update these guidelines as relevant.
The report, entitled, 'Moody's Approach to Evaluating Singapore CMBS Liquidity Arrangement,' is available at www.moodys.com.
The principal methodologies used in rating and monitoring the transactions are "Moody's Approach to Rating Large Loan/Single Borrower Transactions" (July 2000) and "Moody's Approach to Evaluating Singapore CMBS Liquidity Arrangement" (February 2010), which can be found at www.moodys.com in the Research & Ratings directory, in the Rating Methodologies subdirectory.
Other methodologies and factors that may have been considered in the process of rating this issue can also be found in the Rating Methodologies subdirectory.
Moody's also publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SFQuickCheck.
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