S&P Continues It's Commercial RE Downgrade Rampage

The news looks good on the commercial real estate front, as S&P has just announced the downgrade of 384 classes of commercial real estate collateralized debt obligations and re-REMIC(you don't need to know what this stands for). This action alone will affect $17.1B worth of commercial mortgage securities. These and other ratings actions are important because, at this time at least, the Government has said it will limit those assets which can be pledged as collateral in it's balance sheet cleansing programs to AAA securities. No AAA=No program

We commend S&P for at least appearing to possess a modicum of independence in it's ratings decisions, especially as the AAA-needing Treasury Department alphabet programs are struggling to get off the ground. It's actually surprising that the Treasury/Fed has not tried to punish S&P yet for it's rebellious ways. As soon as the Administration starts bandying the term "ratings reform" about, we will at least know what prompted it.

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