The average loss severity rate for U.S. commercial mortgage-backed securities dropped below 40% in the first three months of the year after five consecutive quarters at 50% or higher, according to Standard & Poor’s. Despite the decline, the delinquency rate rose by 2.6%, but it was the smallest quarterly increase since December 2007. The worst performing sector was retail, where loss severity stood at 45.4%, partly due to bankrupt tenant store liquidations at above-average loss severity rates.

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