Weaker Malls Prompt Moody’s Change in Bond Assessments

Moody’s Investors Service is altering how it assesses the weakest shopping-mall loans packaged into commercial-mortgage bonds to compensate for a growing number of properties that may struggle to survive.

The gap is widening between strong shopping centers that can attract tenants and those that may be on a path toward liquidation amid “sluggish” economic growth, Moody’s said in a report being published today. After seeing an increase in malls that raise “concerns about their long-term viability,” the New York-based ratings firm said it will account for potentially greater losses for such properties, which it said can make up 5 percent or more of loans backing commercial-mortgage bonds.