S&P's Diamond: CMBS ratings cuts not "fait accompli"

NEW YORK, June 10 (Reuters) - Standard & Poor's proposed new ratings methodology for commercial mortgage-backed securities is not a "fait accompli", Kim Diamond, a managing director at the credit ratings agency, said on Wednesday.

Standard & Poor's shocked the $700 billion CMBS market last week by advising that a vast amount of top-rated bonds face ratings downgrades based on a proposed change in rating models.

The cuts are seen as a threat to a Federal Reserve program to boost lending in U.S. commercial real estate as the central bank currently requires the bonds carry only "AAA" ratings.

Risk premiums have jumped in recent weeks, indicating investors see the changes as likely.

"One of the more disturbing things that has emerged is people think that it's a fait accompli. I can tell you that is not true," Diamond said on a panel hosted by the Commercial Mortgage Securities Association in New York. The ratings agency was accepting feedback from the industry through Tuesday.

S&P received more than 100 comment letters on its proposed changes, Diamond said.

S&P last week said its proposal to make its models more conservative would likely prompt ratings cuts on 95 percent of top bonds issued during the peak of the real estate cycle in 2007, and 85 percent of CMBS from 2006.

(Reporting by Al Yoon, Editing by Chizu Nomiyama)