June 26 (Bloomberg) -- The ratings on $235.2 billion in debt backed by commercial mortgages may be cut by Standard & Poor’s as it seeks to reflect how the securities would fare in an “extreme economic downturn.”

The possible reductions, disclosed today in a report, follow S&P’s May 26 statement that the ratings of as much as 90 percent of top-ranked commercial mortgage-backed bonds sold in 2007 may be cut because of the changes in how they’re assessed.

If the securities backed by hotels, shopping centers and offices lose their top-ranked status, they’ll be excluded from the Federal Reserve’s $1 trillion Term Asset-Backed Securities Loan Facility, a setback for the government’s efforts to jumpstart lending. S&P expects to finish the review of the debt over the next three to six months, the company said.

S&P wants to be sure that AAA classes can “withstand market conditions commensurate with an extreme economic downturn without defaulting,” analysts including James Palmisano in New York wrote in the report.

The Fed is counting on the TALF to make borrowing cheaper and help facilitate new lending. Top-rated commercial mortgage- backed bonds are trading at a yield gap, or spread, of about 6.7 percentage points more than the benchmark interest rate, compared with 1.93 percentage point a year ago, according to Bank of America Corp. data.

The debt rallied during the past week amid new sales of repackaged securities designed to protect investors from losses and ratings cuts.

“The market had already braced for the downgrades over previous sessions,” said Chris Sullivan, chief investment officer at United Nations Federal Credit Union in New York.

To contact the reporter on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net

Last Updated: June 26, 2009 16:04 EDT