McGraw Hill Financial is negotiating with the Securities and Exchange Commission to keep unit Standard & Poor's from being suspended from rating commercial mortgage-backed securities, a source says. The SEC reportedly is seeking to suspend S&P because of allegations that it doctored ratings in 2011 to obtain business.
A new forecast from Bank of America predicts that commercial mortgage-backed securities sales will slow in the second half of 2013, dragged down by rising interest rates. CMBS sales will reach $65 billion in 2013, according to the analysts, with $40.6 billion already sold. The new prediction is $10 billion less than the bank's analysts had previously expected.
Commercial-mortgage bond issuance might be slowed by as much as $15 billion this year due to rising interest rates, according to Standard & Poor's. The combination of an increase in Treasury yields and of higher yields on the best property-loan-linked securities will reduce the market's momentum, according to a report from S&P.
Underwriters are bypassing Standard & Poor's credit ratings after S&P derailed a $1.5 billion sale in July by Goldman Sachs Group and Citigroup. Now those institutions, together with JPMorgan Chase, Deutsche Bank and Morgan Stanley, are using Kroll Bond Ratings and Morningstar.
Goldman Sachs and Citigroup have pulled a $1.5 billion commercial mortgage bond sale as Standard & Poor's reviews its CMBS criteria. The rating agency told the two investment banks it couldn't rate the offering until it finished its review. In a statement, the banks said S&P had previously said it could offer a rating. In a separate statement, S&P said it was conducting the review after discovering potentially conflicting methods of calculation.