Standard & Poor's Corp. said Tuesday that delinquencies among commercial mortgage-backed securities nearly doubled in the fourth quarter from the third quarter, and warned that multiple-class downgrades from single transactions will become more common in 2009.

S&P said downgrades will outpace upgrades by a wide margin for the second year in a row, in light of higher delinquencies and expectations for an increase in defaults on large loans.

"The dollar amount delinquent was $6.86 billion at the close of 2008, easily distancing itself from the $3.98 billion delinquent at December 2003, which was the previous peak for CMBS delinquencies," said S&P credit analyst Larry Kay.

S&P said delinquencies among commercial mortgage-backed securities ended 2008 at 1.1%, after climbing steadily for six consecutive quarters from a low of 0.27% at March 2007.

S&P credit analyst Eric Thompson said commercial real estate is in the early stage of its correction, and the rating agency projects the delinquency rate could triple from its current level and reach 3% to 3.5% this year.

Two weeks ago Moody's Investors Service Inc. said it would review more than $300 billion of bonds backed by commercial real estate loans, with more than a quarter of the securities susceptible to multiple-notch credit downgrades.

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