CMBS Scandal – Standard & Poor’s No Longer Credible?
There have been a handful of blog posts and various articles written about the curious decision of Standard & Poor’s to upgrade several commercial mortgage backed securities (CMBS) to a triple-A rating just one week after downgrading those same securities to junk or near-junk status of double-B and triple-B minus. What is interesting is that the downgrades eliminated the eligibility of these securities for TALF. Guess what? Now that these securities have been upgraded they are again eligible for TALF. Imagine that. Why did the S&P change its mind and decide to upgrade these securities? This seems very curious to me. The Financial Times blog (http://ftalphaville.ft.com/blog) has more here.
My biggest question is this: Is it realistic to consider any security backed by commercial real estate AAA in any way shape or form? I’m not sure a portfolio of loans secured against properties leased 100% to the United States government would qualify at this point. Ok, maybe that would qualify, but just barely.
