TEXT-Fitch updates commercial real estate criteria for covered bonds

Aug 10 - Link to Fitch Ratings' Report: Criteria for the Analysis of
Commercial Real Estate Loans Securing Covered BondsAug 10 - Fitch Ratings has updated its criteria for analysing asset related
risks of commercial real estate loans that are used as collateral for covered
bonds. The report replaces the previous report "Criteria for the Analysis of
Covered Bonds Secured by Commercial Real Estate" dated 12 August 2011.

Fitch has made several changes to its criteria, all of them being limited in
terms of rating impact. The three main changes are the introduction of a benefit
for tenant granularity, the consideration of additional securities related to
the cover assets, and an adjustment of the default modelling for loans secured
by multifamily properties (MFH).

With the updated methodology, Fitch recognizes the benefit of tenant granularity
in its recovery analysis for loans that are assumed to default immediately based
on their current property income. Whereas previously the assumed property income
was adjusted downwards under the assumption that all tenants would default in a
stress scenario, now Fitch uses a rating dependent default rate to adjust the
property income until lease expiry.

Additional securities will now be considered in the recovery analysis if they
are solely available for the benefit of the bondholders, held in cash or highly
rated sovereign bonds, and assumed to have a material impact on the portfolio's
expected loss.Additional information is available on www.fitchratings.com.

Applicable Criteria and Related Research:
Covered Bonds Counterparty Criteria
Covered Bonds Rating Criteria
EMEA CMBS Rating Criteria
Criteria for Rating Granular Corporate Balance-Sheet Securitisations - SME CLO