KBRA releases the December 2023 issue of CMBS Trend Watch.

The market ended 2023 on a positive note with the Federal Reserve signaling lower rates in 2024, spreads exhibiting signs of stability, and a recent treasury rally. While issuance was still meaningfully lower by 44% on a year-over-year (YoY) basis, indications suggest issuance in the new year may start off strong. Based on our current visibility there could be up to 12 deals that launch in January including six single-borrower (SB), four conduits, one commercial real estate (CRE) collateralized loan obligation (CLO), and one Freddie Mac K-Series (Agency) deal.

In December, KBRA published pre-sales for five deals ($3.6 billion) including two conduits ($1.4 billion), two SB ($1.4 billion), and one Agency ($0.7 billion). December’s surveillance activity included a review of the ratings of 492 securities issued in connection with 40 transactions. Of the 492 ratings, 461 were affirmed, 26 were downgraded, and five were upgraded. In addition, 28 ratings were placed on Watch Downgrade.

The Spotlight section reviews the rating transitions that occurred in 2023. CMBS ratings were largely stable in 2023, as 95% of the outstanding conduit, large loan (LL), and SB ratings were affirmed over the year. However, given the challenges faced by CRE in 2023 the number of rating downgrades (266) were up from 204 in 2022, but below 2020 and 2021 levels of 371 and 292, respectively. On a positive note, there were 55 upgrades, the majority of which occurred among seasoned 2013 and 2014 conduit transactions that benefited from loan payoffs and defeasance.

Click here to view the report.

Related Publications

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• PACE Overview and Market Evolution
• Canadian CMBS Loan Default and Loss Study
• CMBS Loan Performance Trends: December 2023
• CMBS Trend Watch: November 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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