KBRA releases the April 2023 issue of CMBS Trend Watch.

Following the Federal Reserve’s 10th consecutive rate hike, the central bank’s tightening policy may be edging closer to a pause. This should contribute positively to a more stable market that is more conducive to loan originations and securitization. However, commercial real estate (CRE) continues to face headwinds on a number of fronts, including “higher for longer” rates, ongoing asset price discovery amid downward pressure on valuations, and concerns about rising defaults (particularly in the office sector). Another challenge is headline risk—nearly every day, there is negative news about CRE in print or on the airways, whether it is associated with the banking sector or high-profile special servicing transfers. These headwinds will continue to weigh on CMBS private label issuance, which stood at $7.8 billion year-to-date (YTD) through April, down 79.4% on a year-over-year (YoY) basis.

On a more positive note, there could be up to four conduits and one Freddie Mac K-Series launching in May. They could also be joined by two single-asset single borrower (SASB) deals and a commercial real estate collateralized loan obligation (CRE CLO).

In April, KBRA published pre-sales for three deals ($3.1 billion) including one conduit ($0.9 billion) and two Freddie Mac K-Series ($2.2 billion) transactions. April surveillance activity included a review of the ratings of 458 securities issued in connection with 39 transactions. Of the 458 ratings, 437 were affirmed, seven were upgraded, and 14 were downgraded.

This month’s edition also highlights recent KBRA research publications, which cover various topical issues.

Click here to view the report.

Related Publications

• CMBS Office Exposure to Large Layoffs
• Single-Family Rentals: Headwinds Mounting
• Lodging Loan Performance Clouded by Upper Upscale Chains
• Loan KPOs Revised to Underperform for Nine CMBS Single-Borrower Office Transactions
• Conduit CMBS Default and Loss Study: Spotlight on Five-Year Loans
• CMBS Loan Performance Trends: April 2023

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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