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TMCNet:  KBRA Releases Monthly CMBS Trend Watch

[December 05, 2018]

KBRA Releases Monthly CMBS Trend Watch

Kroll Bond Rating Agency (KBRA) releases November's CMBS Trend Watch. CMBS private-label pricing volume was $6.1 billion in November, bringing fourth quarter total volume to $13.0 billion. Year-to-date 2018 private-label CMBS volume stands at $71.2 billion, 9.0% below last year.

Going into the end of the year, we have visibility into at least four conduits, as many as five single borrower (SB) deals, and a multi-borrower single-family rental (SFR (News - Alert)) transaction, all of which may launch in December. While November saw several commercial real estate collateralized loan obligation (CRE CLO) deals, we are only aware of one that will announce in December.

We recently released our CMBS Outlook: Floating into 2019. In this year's CMBS Outlook, we provide reviews and forecasts for issuance activity, property market fundamentals and credit ratings. One of the major highlights in 2018 was the popularity of floating-rate paper issued for both SB and CRE CLO deals.

For 2018, we estimate that SB issuance will end the year between $35-40 billion, and conduitswill also fall within this range, resulting in total 2018 CMBS volume between $70-$80 billion. For 2019, we are forecasting that SB will come in at about $35 billion, but conduits will experience another year-over-year decline, falling to approximately $30 billion. We estimate that CRE CLO volume will be flat in 2019 from our 2018 estimate of about $15 billion.

New issuance activity in November included pre-sales for nine KBRA rated deals ($7.8 billion), including four conduits ($3.2 billion), four CRE CLOs ($3.0 billion), and one Freddie K-Series ($1.6 billion). Surveillance activity included a review of 373 rated classes, including 365 that were affirmed, six that were upgraded, and two that were downgraded. In addition, KBRA highlighted 55 KBRA Loans of Concern (K-LOCs), which consist of specially serviced and REO assets as well as non-specially serviced loans in default or at heightened risk of default.

The three-month rolling average KLTV decreased to 94.3% in November, which represents the lowest this figure has been since September 2017.


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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, 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.

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