Some top-rated commercial mortgage bonds may face ratings downgrades in 2009 as borrowers miss payments and property valuations fall, according to analysts at JPMorgan Chase & Co.

Appraisal reductions on delinquent loans will become more common as borrowers fall behind on payments, JPMorgan Chase analysts led by Alan Todd in New York said in a Jan. 23 report.

"The obvious extension of this is that we also look for a marked increase in rating agency downgrade activity as we move through the year," the analysts wrote.

As property values decline, the interest shortfalls affecting lower-rated debt may erode the cushion protecting the most junior triple-A commercial mortgage-backed securities from losses, the analysts said.

Commercial real estate prices are down 14.5% from the market's peak in October 2007, according to Moody's Investors Service Inc.

When a borrower misses payments, the servicer may have the property reappraised to determine the current value. If the property is worth significantly less than when the mortgage was taken out, the servicer could stop advancing payments on the loan because it is unlikely the money will be repaid in the event of foreclosure, causing interest owed to bondholders to fall short.

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