DBRS Upgrades Seven Classes, Confirms Eight of Merrill Lynch Financial Assets Inc., Series 2004-Canada 12

DBRS has today upgraded the ratings of seven classes of Merrill Lynch Financial Assets Inc., Commercial Mortgage Pass-Through Certificates, Series 2004-Canada 12, as follows:

-- Class C to AAA (sf) from AA (high) (sf)
-- Class D1 to AAA (sf) from A (high) (sf)
-- Class D2 to AAA (sf) from A (high) (sf)
-- Class E to AA (sf) from BBB (high) (sf)
-- Class F to A (sf) from BBB (low) (sf)
-- Class G to BBB (sf) from BB (high) (sf)
-- Class H to BB (high) (sf) from BB (sf)

All remaining rated classes have been confirmed. DBRS does not rate the first-loss piece, Class M. All trends are Stable.

The rating upgrades reflect the increased credit enhancement to the bonds since issuance as a result of loan repayment and amortization. As of the March 2013 remittance report, approximately 39.1% of the collateral has been reduced since issuance. Additionally, nine loans, representing 26.9% of the current pool balance, are defeased.

In the next year, 34 of the remaining 41 loans in the transaction are scheduled to mature. Excluding the nine defeased loans, these 25 loans had a YE2011 weighted-average debt service coverage ratio (DSCR) of 1.70 times (x) and a weighted-average exit loan-to-value (LTV) ratio of 17.0%.

There are no loans in special servicing and there are four loans on the servicer’s watchlist, representing approximately 15.3% of the current pool balance. These loans remain current; however, they are being monitored for low DSCR and low occupancy rates.

As part of its review, DBRS analyzed the top 15 loans and the loans on the servicer’s watchlist, which comprise approximately 76.5% of the current pool balance.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction, including details on the largest loans in the pool and loans on the servicer’s watchlist. The March 2013 Monthly CMBS Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

Notes:
All figures are in Canadian dollars unless otherwise noted.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American Surveillance Methodology (November 2012), which can be found on our website under Methodologies.