(The following statement was released by the rating agency)
March 01 -
-- JLOC 40 is a single-asset CMBS transaction that was arranged by Morgan Stanley Japan Securities Co. Ltd.
-- As the tail period for the transaction shortens, we consider the likely collection amount from the office building that ultimately secures the specified bonds to be under increasing downward pressure.
-- We have placed on CreditWatch negative the ratings on the class A to C specified bonds issued under the transaction.
Standard & Poor’s Ratings Services today said that it has placed on CreditWatch with negative implications its ratings on the class A to C specified bonds issued under the JLOC 40 transaction (see list below).
The specified bonds are ultimately backed by an office building in Minato Ward, Tokyo. Although collection procedures have been undertaken to liquidate the office building since the transaction’s expected maturity date in April 2011, the property has not yet been sold. On Oct. 29, 2010, we revised downward our assumption with respect to the likely collection amount from the property to about 58% of our initial underwriting value. However, we believe that the likely collection amount from this property is under increasing downward pressure as the tail period for the transaction shortens. We intend to review our ratings on the class A to C specified bonds after reconsidering our assessment of the value of the related collateral property.
JLOC 40 is a single-asset commercial mortgage-backed securities (CMBS) transaction. The specified bonds are backed by beneficial interests in a commercial property. The commercial property is owned by a special-purpose corporation (“tokutei mokuteki kaisha”) that is also the issuer of this transaction. The transaction was arranged by Morgan Stanley Japan Securities Co. Ltd.
The ratings reflect our opinion on the full and timely payment of interest and the ultimate repayment of principal by the transaction’s legal final maturity date in October 2013 for the class A specified bonds, and the full payment of interest and ultimate repayment of principal by the legal final maturity date for the class B and C specified bonds.
STANDARD & POOR‘S 17G-7 DISCLOSURE REPORT
SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011.
If applicable, the Standard & Poor’s 17g-7 Disclosure Report included in this credit rating report is available at