Investors in several European commercial mortgage bonds that were originally sold with top credit ratings look set to suffer losses, say analysts, the first time since the global financial crisis that the safest tier of this debt has been hit. Among those set for losses are holders of the most senior bonds in a commercial mortgage-backed security that originally made a loan to Oaktree Capital Management to finance three UK shopping centres.
“There’s no money left to do anything with the assets so we had to be honest with investors and say, ‘we can’t do any more, now is the time to move these assets on’.” The most senior debt issued by Elizabeth Finance, which originally held two loans before one was repaid, was rated triple-A by S&P and Morningstar DBRS in 2018. Oaktree, one of the world’s biggest distressed debt investors, was the original borrower.