NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) released this month’s CMBS Trend Watch today. In the September edition of Trend Watch, we note that $8.1 billion of private-label issuance priced, the highest it’s been since November 2015. For the quarter, pricing volume reached $18.0 billion, a 90.9% increase over the last quarter; however, year-to-date (YTD) 2016 volume of $45.4 billion still lags 39.0% behind this time last year.
In this publication, we spotlight the shifting tide for conduit credit. From a perspective of leverage, 3Q 2016 conduit credit metrics have been the strongest we’ve seen for some time. However, there has been a strong uptick in leverage for the pools we’ve evaluated from mid-September forward. While the 3Q 2016 transactions had low beginning and ending average KLTVs of 95.5% and 84.4%, respectively, most of the recent transactions have had leverage levels in the triple digit range and substantially higher ending leverage.
For spreads, September ended on a down note with the last two conduits pricing at Swaps (S)+115 and +117 for benchmark AAAs. BBB- spreads were wider as well, and ranged from S+520 to +630, up from S+425 to +515 last month. It isn’t clear how much of the widening had to do with supply versus other factors. If supply is the primary reason for the widening it doesn’t bode well for the market given anticipated deal volume in the coming quarter – we are aware of 15 more conduits that are slated to come to market this quarter.
On the ratings front, KBRA published presales for eight deals ($7.1 billion), including five conduits. This month’s surveillance activity included 21 transaction reviews that resulted in 225 ratings actions, all of which were affirmations.
With the September edition of Trend Watch we have also included our KBRA Comparative Analytic Tool (KCAT). The file enables users to compare data points from all KBRA rated conduits.
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