Moody's: Failure to pass terrorism risk insurance legislation credit negative for US CMBS

New York, December 19, 2014 -- The failure of the US Senate last Tuesday to pass the Terrorism Risk Insurance Program Reauthorization Act of 2014 (TRIPRA 2014) is credit negative for US commercial mortgage-backed securities (CMBS), according to Moody's Investors Service. Given the overwhelming bipartisan support TRIPRA 2014 evidenced prior to its sudden demise earlier this week, Moody's believes it highly likely - though not certain - that some type of reauthorization of the federal backstop for terrorism insurance will emerge fairly early in the legislative session when Congress reconvenes on January 6, 2015. However, a repeat failure to renew, or a prolonged delay in renewing, the terrorism backstop could have material negative credit and ratings consequences for both US commercial real estate and for certain classes of rated CMBS.

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