Moody's Says Small Town Blues Affect CMBS Deals.(Commercial Mortgage Backed Securities)

The smaller the town, the greater the chance a commercial mortgage loan will become delinquent, according to a Moody's Investors Service study of commercial mortgage-backed securities.

In fact, Moody's found that loans from towns too small to be part of a Metropolitan Statistical Area were more than five times as likely to become delinquent as loans from the large cities.

For example, the 10 largest cities had a delinquency rate of 0.7%, while towns too small for MSA classification had an average delinquency rate of 3.8%, according to Moody's.

However, because the commercial mortgage loans from small towns are smaller than ones from larger metro areas, the dollar amount of delinquent CMBS from small towns, at $263.2 million, was smaller than the $537.9 million in delinquent CMBS loans from major cities.

"This pattern prevails across all property types," said Moody's analyst Sally Gordon, author of the report.

Moody's says that about 1.3% of loans, by dollar value, that underlying CMBS transactions are delinquent.

There is a clustering of above-average delinquencies in the industrial ...