The first test of rental income behind the Blackstone Group LP’s (NYSE:BX) closely-watched rental-backed bond saw collected rents fall 7.6 percent over the last quarter of 2013.

Investment adviser Morningstar Inc. (NASDAQ:MORN) noted that renewals on rent leases exceeded its expectations, however, Bloomberg reported Wednesday.

The bonds, the centerpiece of a $480 million offering of a new type of financial product, were marketed by Blackstone and major Wall Street banks late last year. They allow investors to capitalize on Blackstone’s ownership of tens of thousands of single-family homes in the U.S., snapped up at bargain foreclosure prices after the financial crisis.

Regulators and lawmakers have worried about the fallout if tenants fail to pay rent or if Blackstone abruptly sells back significant real estate onto the market.

A Blackstone spokeswoman declined comment to Bloomberg.

Falling rental rates, as housing supply expands, may factor into the complex mechanics behind the bond, finance blog Naked Capitalism noted.

“The big test for Blackstone will be the first quarter, the peak period for rent renewals in this transaction,” the blog stated.

One issue with the bonds involves the different risk levels accepted by investors. If rental income from the homes decline, investors suffer to a greater or lesser degree, depending on their risk appetite and the bond’s tranche structure.

“The prices on the riskier tranches which are the first to take the hit if cash flow comes up short fell after the Morningstar news was made public,” the blog noted. “And that alone could prove fatal to this type of deal.

“Dealers do not want to wind up stuck with the riskiest inventory from securitizations, so the ability to sell these deals is constrained by the ability to place the more speculative tranches.”

The bond has an initial two-year term, with extension options. The number of vacant homes among the 3,207 homes backing Blackstone’s security is a key metric for investors and analysts.