May 26 (Bloomberg) -- The highest-graded bonds backed by commercial mortgages may be cut by Standard & Poor’s, potentially rendering the securities ineligible for a $1 trillion U.S. program to jumpstart lending.

As much as 90 percent of so-called super senior commercial- mortgage backed bonds sold in 2007 may be affected as the ratings firm changes how it assesses the debt, New York-based S&P said today in a report. About 25 percent of the bonds sold in 2005, and 60 percent of those sold in 2006 may be cut.

“We believe these transactions are characterized by increasingly more aggressive underwriting than prior vintages,” S&P said. “Furthermore, recent-vintage CMBS, particularly those issued since 2006, were originated during a time of peak rents and values,” and may be more affected by falling rents.

Cutting the ratings would exclude the securities from the Federal Reserve’s program to bolster credit markets by financing the purchase of older commercial real-estate debt. To be eligible for the program, collateral can’t carry a rating below AAA from any rating firm.

Bank Balance Sheets

The Fed is counting on the Term Asset-Backed Securities Loan Facility to cleanse bank balance sheets and help spur new originations. Yields on bonds backed by top-rated commercial mortgages fell relative to benchmark interest rates to the lowest in more than six months after the Fed set terms for its plan to fund purchases on May 19. The debt was trading at about 6.3 percentage points more than the benchmark swap rate as of May 22, compared with a record 15.29 percentage points on Nov. 20, according to Bank of America Corp. data.

About $547 billion in outstanding commercial mortgage- backed securities is currently rated AAA, of which $484 billion is top-ranked, super senior debt, according to Morgan Stanley. The Fed excluded so-called mezzanine and junior AAA commercial mortgage bonds from TALF.

“If S&P were to come out and implement a lot of the downgrades they’re talking about, a big chunk of securities would be removed from the legacy TALF program,” said Bill Bemis, a portfolio manager who helps manage about $40 billion at Aviva Investors in Des Moines, Iowa.

Thomas Lemmon, a spokesman for S&P competitor Moody’s Investors Service, declined to comment.

“We do not comment on other credit rating agencies’ criteria,” said Kevin Duignan, managing director, Fitch Ratings, in an e-mailed response.

To contact the reporter on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net

Last Updated: May 26, 2009 17:06 EDT