In one sentence
A firm assigning credit ratings to securitized debt, whose criteria shape how loans are structured and pooled.
The longer version
Rating agencies rate the bonds in a securitization, and their criteria influence loan structures, reserves, and legal opinions well before securitization. Rating agency confirmations gate certain post-closing actions.
Defeasance and some assumptions require rating agency confirmation, tying loan-level events to the securitization's rating.
Common questions
- What does a rating agency do in CMBS?
- Assigns credit ratings to the bond classes in a securitization based on its analysis of the underlying loans and the deal structure.
- How do rating agencies affect loan terms?
- Their criteria influence how loans are sized, structured and documented for securitization, including leverage, reserves and single-purpose entity requirements.
- When are rating agencies consulted after closing?
- Some actions on securitized loans, such as certain assumptions or modifications, may require confirmation that the action will not affect the ratings.
Keep reading
- Loan participations: a working guideLead and participant, document flow, ongoing obligations.
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- The due diligence checklist, built to be runChecklists as systems, not documents.
- Commercial loan softwareWhere this sits in the lending stack.