OREANDA-NEWS. S&P Global Ratings today raisedits ratings on two classes of commercial mortgage pass-through certificates from Morgan Stanley Dean Witter Capital I Trust 2002-IQ3, a U. S. commercial mortgage-backed securities (CMBS) transaction (see list).

Our rating actions follow our analysis of the transaction, primarily using ourcriteria for rating U. S. and Canadian CMBS transactions, which included a review of the credit characteristics and performance of the remaining loans inthe pool, the transaction's structure, and the liquidity available to the trust.

We raised our ratings on classes F and G to reflect our expectation of the available credit enhancement for these classes, which we believe is greater than our most recent estimate of necessary credit enhancement for the respective rating levels. The upgrades also follow our views regarding the current and future performance of the transaction's collateral, the available liquidity support, and the significant reduction in trust balance.

Class G was previously lowered to 'D (sf)' because of accumulated interest shortfalls that we expected to remain outstanding for a prolonged period of time. We raised our rating on this class because the interest shortfalls, which were primarily due to appraisal subordinate entitlement reduction amounts on two loans that have since liquidated from the trust, have been repaid in full, and we do not believe, at this time, a further default of thisclass is virtually certain.

While available credit enhancement levels suggest further positive rating movement on class G, our analysis also considered the absolute level of liquidity support for this class, as well as its exposure to any future defaults, as this bond is expected to remain outstanding until 2021.

TRANSACTION SUMMARY

As of the July 15, 2016, trustee remittance report, the collateral pool balance was $17.0 million, which is 1.9% of the pool balance at issuance. The pool currently includes 29 loans (reflecting cross-collateralized loans), downfrom 248 loans at issuance. No loans are with the special servicer, one loan ($0.3 million, 1.6%) is defeased, and 11 loans ($5.5 million, 32.3%) are on the master servicer's watchlist. The master servicer, Berkadia Commercial Mortgage LLC, reported financial information for 96.0% of the non-defeased loans in the pool, of which 94.3% was year-end 2015 data, and the remainder was year-end 2014 data.

We calculated a 1.41x S&P Global Ratings' weighted average debt service coverage (DSC) and 22.1% S&P Global Ratings' weighted average loan-to-value (LTV) ratio using a 7.84% S&P Global Ratings' weighted average capitalization rate. The DSC, LTV, and capitalization rate calculations exclude the one defeased loan. The top 10 nondefeased loans have an aggregate outstanding pooltrust balance of $10.3 million (60.6%). Using servicer-reported numbers, we calculated an S&P Global Ratings' weighted average DSC and LTV of 1.44x and 22.3%, respectively, for the top 10 nondefeased loans.

To date, the transaction has experienced $43.6 million in principal losses, or4.8% of the original pool trust balance.