NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) has released a new structured finance research report, “Food for Thought: Opportunities in Whole Business Securitization.” The report makes the following key points:
- Risks to whole business securitizations have increased marginally over the past year as the U.S. restaurant industry grapples with a decline in foot traffic and same-store sales growth. Notably, the casual dining restaurant segment has experienced five consecutive quarters of negative same-store sales growth, while other restaurant segments have seen slowing growth over the same period.
- While headwinds in the restaurant sector have increased, credit risk remains reasonable. Debt service coverage ratios have been stable or rising across the majority of whole business securitizations, while leverage ratios have generally fallen over the past year.
- With the robust issuance volumes over the past three years, a “maturity wall” has developed in 2022, at which time approximately $4.8 billion of debt (approximately 25% of current outstanding), will reach its ARD. If the credit markets are not accommodative in 2021-2022 refinancing may not be a viable option for some issuers.
- Although prices have rallied significantly over the past 12 months, with yields of 4.5-5.0% (six- to seven-year WAL), the asset class offers significant pick-up to BBB rated corporate bonds and similarly rated securitized asset classes.
To view the report, click here.
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About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).