Bond-rating agencies are sounding the warning on conduit loans: in their view, the loans are getting too large compared to the likely value of the real estate they are securing. Rating firms threaten to get tougher on the credit enhancement levels they set for CMBS issues, which will eventually result in higher interest rates for CMBS borrowers. Moody’s Investors Service has already raised its credit enhancement for CMBS, and plans to do so again. Today’s conduit borrowers might ...

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