KBRA reports several positive trends in CMBS

KBRA said deal flow is picking up, while conduit loan-to-values declined and spreads tightened through May.

Kroll Bond Rating Agency noted in its monthly report that lending is picking up at several CMBS origination shops and overall deal flow is picking up, while conduit loan-to-values declined and spreads tightened through May.

Ten private label securitizations priced in May, and there are seven deals in the pipeline for June and July, according to the report.

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(click to expand)

KBRA is currently engaged to provide preliminary feedback on three conduits, and to rate three that will post through early July. There is also a non-KBRA rated conduit that will come to market in the latter half of June.

Though deal sizes have on average been 20 percent smaller than last year’s, the balance of two of these conduits could exceed the 2015 average, the agency added.

The May deals included seven conduits ($5.6 billion), one seasoned loan ($259.7 million) deal, one transitional pool ($230.2 million) and one single-family residential ($255.0 million) transaction.

May did mark the first month this year where no single-asset single-borrower (SASB) transactions priced, but several of the upcoming deals are SASB transactions.

Conduit spreads tightened with last cash flow AAAs ranging from S+110 basis points to S+130 bps, while the comparable figures for credit bonds (BBB-) were S+565 to S+720.

KBRA’s three-month rolling LTV average of 99.5 percent was the lowest it has been since February 2014 (see yellow line on chart). 

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