zero hedge Fri 2009-10-23 09:05 EDT
Fitch Expects CMBS Loss Severity To Rise Markedly Next Year
As anyone who has spent even a day looking at securitization tranching or CDS trading will tell you, there are two critical components to any investment that involves risky fixed income: cumulative loss probability and loss severity...artificial delays in bringing the CRE market to fair value in terms of delinquencies and REOs going to foreclosures will simply result in much lower eventual recoveries...the temporary reprieves granted to many leveraged securities will come back to bite investors when defaults eventually pick up again, however with the result being loss rates which will be much higher than default expectations.
Fitch Expects CMBS Loss Severity; Rise Markedly; years; Zero Hedge.