The proposed update to the methodology can be downloaded here.

The CRE loan and CMBS Rating Methodology complements the General Structured Finance Rating Methodology and should be read in conjunction with the Counterparty Risk Methodology.

Summary of the proposed key changes

This proposed update includes the following adjustments:

1. Amendment of our sponsor and business plan analysis
2. Deletion of the appendix on business plan analysis
3. Clarification of our modelling approach for granular CRE portfolios
4. Clarification of our collateral value calculation
5. Clarification of our definition of refinancing default probability
6. Clarification of the integration of environmental, social and governance (ESG) factors in our analysis
7. Expansion of our CMBS liability analysis
8. Introduction of an appendix on notes backed by CRE debt funds
9. Updates of our illustrative rental value haircuts, property and vacancy costs and capitalisation rates
10. Clarification of our foreclosure analysis
11. Editorial changes

The proposed changes are not expected to affect existing ratings assigned by Scope.

Call for comments

Scope invites issuers, investors and other interested parties to comment on the methodology by 22/09/2022 as part of the agency’s ongoing commitment to transparency and an open dialogue with market participants.

Please send your comments to consultation@scoperatings.com.

Scope will review and publish the content of written responses in accordance with regulatory requirements unless the respondent has specifically requested confidentiality.