KBRA Releases Monthly CMBS Trend Watch

Editorial & Advertiser Disclosure Global Banking And Finance Review is an independent publisher which offers News, information, Analysis, Opinion, Press Releases, Reviews, Research reports covering various economies, industries, products, services and companies. The content available on globalbankingandfinance.com is sourced by a mixture of different methods which is not limited to content produced and supplied by various staff writers, journalists, freelancers, individuals, organizations, companies, PR agencies Sponsored Posts etc. The information available on this website is purely for educational and informational purposes only. We cannot guarantee the accuracy or applicability of any of the information provided at globalbankingandfinance.com with respect to your individual or personal circumstances. Please seek professional advice from a qualified professional before making any financial decisions. Globalbankingandfinance.com also links to various third party websites and we cannot guarantee the accuracy or applicability of the information provided by third party websites. Links from various articles on our site to third party websites are a mixture of non-sponsored links and sponsored links. Only a very small fraction of the links which point to external websites are affiliate links. Some of the links which you may click on our website may link to various products and services from our partners who may compensate us if you buy a service or product or fill a form or install an app. This will not incur additional cost to you. A very few articles on our website are sponsored posts or paid advertorials. These are marked as sponsored posts at the bottom of each post. For avoidance of any doubts and to make it easier for you to differentiate sponsored or non-sponsored articles or links, you may consider all articles on our site or all links to external websites as sponsored . Please note that some of the services or products which we talk about carry a high level of risk and may not be suitable for everyone. These may be complex services or products and we request the readers to consider this purely from an educational standpoint. The information provided on this website is general in nature. Global Banking & Finance Review expressly disclaims any liability without any limitation which may arise directly or indirectly from the use of such information.

Kroll Bond Rating Agency (KBRA) releases Februarys CMBS Trend Watch.

CMBS private label pricing volume increased in February to $6.6 billion, which is more than double the activity observed in January. However, 2019 year-to-date volume still lags 2018 at $9.3 billion, representing an 8.0% decrease year-over-year.

In March, we could see the launch of five to six single-borrower deals as well as three conduits, three commercial real estate collateralized loan obligations (CRE CLOs), and one small balance transaction.

With the dramatic rise in single-tenant exposure over the past few years, our Spotlight section this month takes a closer look at this asset class. While hovering in the high teens over the past couple of years, it surpassed the 20% threshold in February. As part of our review, we aggregated and compared single-tenant loan exposure for 2018 and 2017.

Compared with 2017, the single-tenant loans weighted average leverage increased slightly to 96.1% from 95.6%, while the interest-only (IO) Index experienced a more significant change, moving to 77.5% from 67.8%. While these figures indicate that risk increased among single-tenant loans in 2018, we also looked at the collateral characteristics of the underlying 2018 commercial real estate loans relative to 2017.

In February, KBRA published pre-sales for seven deals ($4.2 billion), including two conduits ($1.5 billion), two CRE CLOs ($1.7 billion), two single borrowers ($570.0 million) and one single-family rental ($450.7 million). There were also 344 surveillance actions effectuated in February, including 326 affirmations, 15 upgrades, and three downgrades.

KBRA analysts also attended the SFIG Las Vegas conference in late February. On a positive note, CMBS market participants we spoke with were generally constructive on credit, given relatively low in-trust leverage, healthy debt service coverage, and current credit enhancement. But concerns were also expressed regarding credit-barbelling and single-tenant exposures, among other items.

Of course, not a day after the conference ended, a conduit launched (not KBRA-rated) with a BBB- subordination level at 4.5%, which seemed to negate some of those positive feelings. This was a head scratcher at this point in the cycle, as over the last several years we were only able to readily identify one conduit with a sub 5.0% BBB- enhancement (not KBRA-rated).

Related Publications: (available at www.kbra.com)


Twitter LinkedIn Download the iOS App YouTube

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, is 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.

Kelly, Associate
(646) 731-3362
[email protected]

Hinman, Associate Director
(646) 731-2418
[email protected]

Kay, Senior Director
(646) 731-2452
[email protected]

Thompson, Senior Managing Director
(646) 731-2355
[email protected]