Testing time for Commercial-Mortgage Backed Securities refinancing

The global credit crunch and increasing competition for funding spell tough times ahead for Commercial-Mortgage Backed Securities (CMBS) in Singapore.

Fitch Ratings says such securities will face difficulties when it comes to refinancing this year.

This is due in part to growing competition for funding from various real estate and casino developments in Singapore.

However, the recent strong cash flow performance of CMBS transactions is expected to help mitigate the refinancing risk.

Eleven Fitch-rated public Singapore CMBS worth about S$6 billion were outstanding at the end of last year.

The tightening credit supply also means that various refinancing alternatives – including bank lending, sponsor financing and CMBS – are likely to become more popular.

Fitch says Singapore’s commercial property market has had several years of rental and capital value growth.

Source : Channel NewsAsia – 9 Jan 2009

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