NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) released this month’s CMBS Trend Watch today. In April, CMBS private-label pricing volume was $3.7 billion across two conduits ($1.9 billion) and two single borrower deals ($1.8 billion). The sluggish volume represents a 20.4% decline from this time last year. However, we are aware of approximately nine conduits and 14 single borrower deals expected to price by the end of June. In addition, there are also a handful of CRE CLOs and large loan floating rate transactions in the works.
The BANK 2017-BNK4, was the first conduit to price in April, pricing at Swaps (S)+95 basis points for the AAA LCF class. The next conduit, CD 2017-CD4, which didn’t price until late April, went out at S+92, on top of the YTD average. The comparable BBB- spreads for BNK4 and CD4 were S+375 and +340, respectively, which were wide compared to last month’s range of S+315 to +365.
On the surveillance front, 211 ratings actions, including two upgrades and two downgrades, were taken across 17 transactions. In addition, KBRA highlighted 36 K-LOCs as part of the reviews. K-LOCs are loans that are either in default or at heightened risk of default. During the month, there were 11 KBRA Performance Outlook (KPO) changes, all of which were revised to Underperform from Perform.
In our spotlight section, Risk Retention Doesn’t Appear to Be Translating into Better Credit, we reviewed the credit and pricing from Q4 2016 non-risk retention compliant conduits and Q1 2017 risk retention conduits. Although the risk retention conduit transactions priced tighter, it hasn’t necessarily been a result of better credit metrics.
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