KBRA Releases Monthly CMBS Trend Watch

NEW YORK--()--NEW YORK (October 4, 2019) – Kroll Bond Rating Agency (KBRA) releases September’s CMBS Trend Watch.

CMBS private label pricing volume ended September at $6.9 billion. This brings the year-to-date issuance total to $56.1 billion, down 3.5% on a year-over-year comparison.

The 10-year Treasury rate has trended lower since the beginning of the year, albeit with considerable volatility. This, coupled with the Federal Reserve’s lowering of interest rates for the first time since 2008, has helped spur issuance. We currently have visibility of up to 23 deals that could launch through October including as many as nine single-borrower (SB) transactions, seven conduits, two Freddie Mac K-Series securitizations, two small balance commercial transactions, and as many as three commercial real estate collateralized loan obligations (CRE CLOs) transactions.

In the Spotlight section, we conducted an analysis of the ability of 110 ($2.7 billion) current non-defeased 10-year loans that mature in 2020 to get refinanced—the first year that a meaningful amount of post-crisis 10-year conduit loans come due. Retail had the largest concentration accounting for more than two-thirds of the referenced population, followed by office at 13.7%. Various capitalization rates based on full-year 2018 net operating income were used under a number of loan-to-value (LTV) scenarios.

During the month, KBRA published pre-sales for 11 deals, including five conduits ($4.6 billion), two CRE CLOs ($1.4 billion), one Freddie Mac K-Series ($1.5 billion), two SFRs ($788.3 million), and one single-borrower ($460 million) in September.

Surveillance activity included actions on 353 rated classes consisting of 348 affirmations and five downgrades. The activity went across 31 transactions, including 18 conduits, four single borrowers, four Freddie Mac K-Series, four large loans and one CRE CLO. KBRA also highlighted 72 KBRA Loans of Concern (K-LOCs), which consist of specially serviced and real estate owned (REO) assets as well as non-specially serviced loans in default or at heightened risk of default. There were also 13 KBRA Performance Outlook (KPO) changes, including 11 to Underperform from Perform, one to Perform from Underperform, and one to Outperform from Perform.

To view the report, click here.

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical Contacts:
Giselle Vuong, Senior Analyst
(646) 731-2435
gvuong@kbra.com

Larry Kay, Senior Director
(646) 731-2452
lkay@kbra.com

Eric Thompson, Senior Managing Director
(646) 731-2355
ethompson@kbra.com

Contacts

Analytical Contacts:
Giselle Vuong, Senior Analyst
(646) 731-2435
gvuong@kbra.com

Larry Kay, Senior Director
(646) 731-2452
lkay@kbra.com

Eric Thompson, Senior Managing Director
(646) 731-2355
ethompson@kbra.com