UPDATE 1-S&P says recent US CMBS highly susceptible to cuts

(Adds details, trading)

NEW YORK, April 6 (Reuters) - Standard & Poor's on Monday said it will make negative pronouncements on U.S. commercial mortgage-backed securities on a "large scale" in coming days after a review of the securities.

The most-recently issued CMBS are "highly susceptible" to downgrades, including top-rated "AAA" issues, after the review that accounted for eroding real estate markets, lack of financing for the assets, and the economic recession.

"We concluded that the ratings on a significant portion of our CMBS portfolio may no longer be appropriate, given our view of the increase in credit risk," S&P said in a statement.

The $700 billion market for U.S. CMBS last year was one of the worst performing bond sectors as the credit crunch raised concerns that aggressively underwritten loans would fail to get refinanced at maturity, and force many borrowers into default. Signs of a weakening economy added to those pressures since CMBS payments are drawn from the revenue off office, retail and apartment buildings, and hotels.

Downgrades of "AAA" rated bonds are a big concern for money managers whose funds are restricted from holding lower-rated debt, including insurance companies, analysts said.

CMBS bounced in late March after the government announced it will expand a Federal Reserve lending program to more CMBS, and encourage public-private partnerships to invest in risky assets. The rally has sputtered since late last week, however.

Yield spread premiums on an index of the most recent "AAA" CMBS issues increased to 577 basis points over an interest rate benchmark from 571 basis points on Friday, according to Markit. Spreads on riskier "AJ" index widened to 2,087 from 2,060.

S&P said it based its review on expectations that U.S. unemployment would rise to 9.8 percent by the second quarter of 2010, from 8.5 percent today.

Further, commercial real estate performance typically lags the economy, putting it in the early stages of a correction, S&P said. But delinquencies have already soared 180 percent since September 2008 and 43 percent this year, to 1.57 percent, it said.

As a result of rating actions on CMBS, S&P said it expects to put many ratings on commercial real estate collateralized debt obligations (CRE CDOs) on Creditwatch negative.

(Reporting by Al Yoon; Editing by Diane Craft)