RT Journal Article SR Electronic T1 CMBS Risk Precision: Academics to the Rescue JF The Journal of Structured Finance FD Institutional Investor Journals SP 32 OP 36 DO 10.3905/jsf.2013.19.2.032 VO 19 IS 2 A1 Ann Rutledge A1 Sylvain Raynes A1 Andriy Bulava A1 Francis Galasi YR 2013 UL https://pm-research.com/content/19/2/32.abstract AB New originations in the U.S. collateralized mortgage-backed securities (CMBS) market sector in 2013 are eclipsing new growth in asset-backed securities (ABS) and residential mortgage-backed securities (RMBS). What is behind this growth? Are investors asserting their preference for a more-tangible asset class that uses a more-fundamental analysis? Or are borrowers better able to sell into a market where the information model is too simple to fully reflect relative risk? The authors propose a method to sharpen CMBS credit analysis by recycling the RMBS information model and leveraging solid academic research findings. This article strives to highlight the wide gap between the broad-based consensus that exists in the literature and the current methods used by practitioners, hopefully to bridge it. The CMBS market has a long and deep history of academic research, one that, however, has yet to bring about a corresponding change in the analytical techniques, assumptions, and information model used by CMBS issuers, rating agencies, and arrangers. The authors show how credit analysis can be made more precise and grounded by reference to default studies by Esaki and Goldman and pioneering analytical work by Varnell, Childs, Riddiough, and Thompson, to mention just a few. Their painstaking results can now form the basis of an analysis more universal to the valuation of CMBS securities across the capital structure, providing greater transparency to already much-maligned investors.TOPICS: CMBS and commercial mortgage loans, legal/regulatory/public policy