The economic news just keeps getting worse on the other side of the Atlantic.

Moody's Investors Services issued a report that indicated the number of struggling commercial property borrowers in Europe continues to rise--a conclusion drawn from the acute increase in the number of mortgages on the "watchlist."

According to an article in the Financial Times,

Watchlists are an early indicator of potential events of default or transfer to special servicing, which sees commercial property experts move in to explore the best ways to cure a mortgage's troubles or look at options for a work-out or sale, the agency said in a report published yesterday.

The Moody's report follows analysis from Fitch, a rival ratings agency, which showed a high chance of widespread defaults in the US and UK commercial property mortgage markets if the gloomy economic predictions for those markets were true. ...

"The number of loans experiencing adverse issues is growing, as can be seen from the number of loans which have been added and have remained on servicers' watchlists over the past four quarters," says Viola Karoly, a Moody's analyst and coauthor of the report. ...

"Given that more than 50 per cent of all loans currently on watch are in breach of coverage or loan-to-value covenants, the number of loans defaulting and/or moving into special servicing is expected to increase over the next couple of months and quarters," the report said.