KBRA releases the June 2023 issue of CMBS Trend Watch.

In this month’s Spotlight, we highlight the conditions in which commercial real estate collateralized loan obligation (CRE CLO) collateral managers can extend loans. The Spotlight followed market dialogue spurred by our recent report, which highlighted how collateral compositions have evolved over time in the wake of slowing loan prepayments and securitization note redemptions. Notably, the narrative shared the observation that many 2019 deals afforded the collateral manager the ability to make performing loan modifications without special servicer approval.

First-half (1H) 2023 ended on a somber note with the Federal Reserve warning of further rate hikes on the horizon. However, CMBS private label issuance in June saw five deals cross the finish line before the long July Fourth weekend. Based on our current visibility, there could be up to 11 more to follow in July and early August. These include five conduits, three single-borrower (SB) deals, and three CRE CLO deals. A total of $16 billion was issued by the close of 1H, with year-over-year (YoY) issuance down 67.9%. Leading the CMBS decline was SB, which saw deal count plummet YoY to 12 from 38 and with issuance volume down 80%.

In June, KBRA published pre-sales for six deals ($4.4 billion) including three conduit ($2.4 billion), one Agency ($1.1 billion), and two SB ($0.92 billion) transactions. June’s surveillance activity included a ratings review of 530 securities issued in connection with 45 transactions. Of the 530 ratings, 505 were affirmed and 25 were downgraded. In addition, eight ratings were placed on Watch Downgrade.

Click here to view the report.

Related Publications

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• Freddie Mac K-Series: First-Quarter 2023 Defeasance and Supplemental Debt Plummet After Record High in 2022
• What Debt Yield Reveals About Upcoming Office Maturities
• What Remains in Seasoned CRE CLOs?
• Data Centers in U.S. Securitization: A Primer
• Workout Fees Lurking in CMBS Waterfalls

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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