S&P Expects to See Rise in Commercial Delinquencies This Year.(Standard & Poor's Corp.)

A rise in commercial mortgage-backed securities delinquencies is anticipated by Standard & Poor's.

Although commercial mortgage-backed securities have performed well creditwise in the last decade, their performance is tied to the state of the economy.

And the credit rating agency expects a "lagging impact from the anemic economic recovery" to push CMBS delinquencies up.

Even then, "with limited cumulative losses so far, investment-grade CMBS have a comfortable cushion to withstand substantial future losses," according to Dr. Joseph Hu, managing director of research in S&P's structured finance group.

The performance of CMBS in the last 10 years suggests to S&P that "pooled commercial mortgages have been carefully underwritten with unique credit performance characteristics."

Dr. Hu notes, "The credit risk of a commercial mortgage pool is determined by a confluence of micro-economic factors of the local and national economies.

"On the other hand, the strong performance of CMBS can also be attributed to the economic prosperity of the last decade that greatly benefited the market value of commercial real estate properties. Rapidly appreciating property values have ...