TEXT-Fitch cuts CSC Series 1 GK's 3 classes
(The following statement was released by the rating agency)
Sept 14 - Fitch Ratings has downgraded CSC Series 1 GK's three classes of bonds due November 2012 and affirmed the rest. The transaction is a Japanese multi-borrower type CMBS securitisation. The details of the rating actions are as follows:
JPY0.4bn* Class B-2 bonds downgraded to 'CCsf' from 'CCCsf'; Recovery Estimate 100%
JPY0.4bn* Class B-3 bonds downgraded to 'CCsf' from 'CCCsf'; Recovery Estimate 100%
JPY3.2bn* Class C-2 bonds downgraded to 'Csf' from 'CCsf'; Recovery Estimate 60%
JPY3.2bn* Class D-2 bonds affirmed at 'Csf'; Recovery Estimate 0%
JPY0.4bn* Class E-2 bonds affirmed at 'Dsf'; Recovery Estimate 0%
JPY0.3bn* Class E-3 bonds affirmed at 'Dsf'; Recovery Estimate 0%
JPY0* Class F-3 bonds affirmed at 'Dsf'
JPY0* Class G-3 bonds affirmed at 'Dsf'
*as of 13 September 2012
The downgrades of the class B-2 and B-3 bonds reflect Fitch's view that interest on these classes will not be paid at legal final maturity in November 2012. However, principal proceeds received from the underlying loan are sufficient to repay the principal of these bonds in full.
The special servicing fee relating to the sale of the collateral properties is large and likely to be deducted from the fund that pays the interest on the bonds, rather than from the account holding principal proceeds received from the underlying loan. One property was sold after the August 2012 bond payment date, the sales proceeds of which are sufficient to repay the principal of the class B-2 and B-3 bonds in full.
The downgrade of the class C-2 bonds reflects Fitch's view that principal loss on these bonds is inevitable as the workout activity for the last remaining loan, which defaulted in November 2009, approaches its final phase. Fitch believes that the sales proceeds of the one remaining property backing this defaulted loan are unlikely to be sufficient to redeem the class C-2 bonds in full.
Class F-3 and G-3 bonds were written down to zero in February 2012 and Recovery Estimates for these bonds have not been calculated since then.
At closing in December 2006, the bonds were backed by loans extended to six borrowers, and secured by 72 properties. The transaction is now backed by one defaulted loan backed by one property and sales proceeds from a sold property.
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