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

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

-- Class E to AAA (sf) from AA (sf)
-- Class F to AAA (sf) from A (sf)
-- Class G to A (sf) from BBB (sf)
-- Class H to BBB (low) (sf) from BB (high) (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 2014 remittance report, approximately 94.3% of the collateral has been reduced since issuance, including a collateral reduction of 55.2% since the last DBRS rating action in April 2013.

In the next six months, the remaining seven loans in the transaction are scheduled to mature. These loans had a YE2012 weighted-average debt service coverage ratio (DSCR) of 1.41 times (x) and a weighted-average exit debt yield of 15.7%. Given the strong credit metrics of these remaining loans, DBRS believes they have a high likelihood of refinancing.

There are six loans on the servicer’s watchlist, representing 90.4% of the current pool balance. These loans remain current and are on the servicer’s watchlist because of their respective upcoming maturity dates, which occur within the next two months.

As part of its review, DBRS analyzed every loan in the transaction.

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 2014 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:
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.