A proposed change in how Standard & Poor's Corp. rates bonds backed by commercial mortgages may take several weeks, leaving the loans eligible for a Federal Reserve Board financing program in the meantime.

S&P stunned the markets last month when it announced that proposed alterations to its ratings methodology could lead to a swath of downgrades on commercial mortgage-backed securities, making them ineligible for cheap financing through the Fed's Term-Asset Backed Securities Loan Facility.

The Fed will offer loans for only existing commercial mortgage bonds that carry triple-A ratings from at least two of five rating agencies and no other ratings lower than that.

Since the announcement, S&P has received plenty of comments from investors.

Darrell Wheeler, the head of securitization research at Citigroup Inc., said S&P was "unable to convince … market participants that the bonds should be downgraded." Though the rating agency will "likely still change its methodology, now it will hopefully consider the investors' input, which could take weeks or months."

S&P would not detail the timing of the downgrades.

"Once we have examined the feedback, we will issue the new criteria," said Adam Tempkin, a spokesman for S&P.

The Fed is likely to offer loans to buy these bonds beginning next year.

About $350 billion of bonds would be eligible for purchase, according to Robert Dobilas, the president and chief executive officer of Realpoint LLC, a Horsham, Pa., credit rating agency.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.