Realty issues seen quintupling.

Sales of securities backed by commercial real estate loans will quintuple to $20 billion this year, Fitch Investors Service Inc. predicted Friday.

About two-thirds of the issuance will come from the Resolution Trust Corp., Fitch said.

The rating firm is prepared to join Standard & Poor's Corp., Moody's Investors Service Inc., and Duff & Phelps Credit Rating Co. in rating securities backed by commercial real estate.

The other agencies rated about $4 billion of these securities last year.

Commercial mortgage securitization has been as a way for banks to reduce exposure to real estate. But few banks have been willing to take the losses entailed in creating the securities.

|Stress Test'

Ron J. Wechsler, an analyst at Fitch, said that in assigning ratings the agency will apply a "commercial mortgage stress test."

This will attempt to address concerns raised by investors, whose wariness of real estate has contributed to the high reserve fund requirements for issues by the RTC, the leading issuer.

"In the last year or so, we've visited with a lot of investors who say they understand the rating agency approach, but they'd like to see a little more historical backup for it," Mr. Weschler said.

Study of the Data

Fitch reviewed historical data provided by several life insurance companies, the U.S. Department of Housing and Urban Development, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corp., the RTC, and several commercial banks.

Like other agencies, Fitch will incorporate two main measures of mortgage performance into its ratings: default probability and loss severity.

A regulation that requires banks to hold capital against the entire security when it retains the subordinated portion of an issue poses another obstacle to bank participation, noted Daniel J. Smith, vice president of Duff & Phelps.

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