April Private-Label CMBS Issuance Hit Four-Year Low


The volume of private-label commercial mortgage-backed securities issuance last month was the lowest since February 2012, dipping to $2.1 billion, according to a report by Kroll Bond Rating Agency today. Private-label CMBS issuance is also down 45 percent year-over-year, at $19.3 billion.

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Nine CMBS deals priced last month in total, including five Freddie Mac K-Series ($6 billion), two conduits ($1.5 billion) and two single-borrower ($548.5 million).

Some market participants had cautiously pinned hopes on an imminent turnaround in issuance, according to KBRA’s report, citing recent spread tightening, “whispers of an increase in loan applications over the past month,” and an expected new flurry of new issuance through mid-May. Kroll analysts, however, pointed to the dearth of new loan origination over the past couple of months as evidence to the contrary, and is holding fast with its 2016 private-label issuance estimate of $60 billion. Sorry, folks.

On the positive side, and counter to expectations, many of the smaller loan originators that were supposed to be driven out of the market by the stringent asset disclosure requirements of Reg AB II are seemingly sticking around. The number of originators has remained relatively consistent on a year-over-year basis, said KBRA analysts in the report. For the first four months of 2016, there were 31 different loan sellers, and the top 15 generated 79 percent of conduit originations. This is similar to last year—when there were 32 loan sellers and the top 15 contributors originated 84 percent. That said, the number is down from fourth-quarter 2015, when there were approximately 40 originators, and it isn’t clear how active some of the remaining players will be over the course of the year. Not surprisingly, much of the activity was comprised of loans with relatively smaller balances.