Governance and social risks are the main ESG factors that affect credit ratings of MBS and ABS, while environmental relevance remains low, according to Fitch Ratings.

The FHFA will significantly reduce a controversial fee for comingled securities in UMBS; no consistent trend in delinquencies and losses across MBS and ABS in December; term SOFR not an option as GSEs leave LIBOR behind.

Roughly $1.3 billion in newly delinquent CMBS loans were reported in December, most of which were nonperforming balloon loans reaching maturity.

Kroll Bond Rating Agency expects single-borrower/large loan volume to decrease, while Moody’s said interest rates, lower prepayment rates, fewer property acquisitions and limited loan maturities will weigh on issuance.

DBRS Morningstar said inflation and high interest rates will make it hard for borrowers to pay off CMBS loans that mature in the next two years.

The ratings service expects commercial MBS loan delinquencies will reach between 4.0% and 4.5% by year-end 2023. S&P Global Ratings, meanwhile, said CMBS delinquencies crept up 5 bps in November.

Despite a rebounding travel economy, some properties are still experiencing lower net cash flow and will likely be pinched by rising rates when it comes time to refinance.

FirstKey Homes is set to issue an $871.6 million deal backed by loans on 1,827 income-producing properties, while Bridge Single-Family Rental Fund IV Aggregator is prepping its first SRF securitization. 

The CMBS delinquency rate will be steady through the end of the year, Fitch Ratings said, before deteriorating in 2023. Meanwhile, KBRA found that most of the single-borrower CMBS loans in default developed performance problems during the height of pandemic lockdowns.

Securitization of office-property mortgages fell to its lowest level in 10 years, while retail and lodging also saw big declines in the third quarter. Agency multifamily MBS issuance held up better, paced by a modest gain in Freddie production. (Includes two data charts.)