Thanks to the COVID crisis, appraisal reductions in commercial MBS are rising rapidly and may be a harbinger of future loan losses, warns Kroll Bond Rating Agency.

CMBS delinquencies declined by 36 basis points to 7.81% in December, well below the peak of 10.34% in June, according to analytics provider Trepp.

Several factors will support new loan credit quality next year, including re-covering CRE fundamentals, capital market liquidity, demand for real assets and some degree of conservatism in underwriting, said Moody’s.

Issuance of rated non-agency MBS and ABS rose significantly during the third quarter, although both markets continued to lag behind 2019 on year-to-date volume. (Includes two data charts.)

The delinquency rate on commercial MBS in November slipped modestly thanks to continued COVID-related relief. The recovery ahead will be slow, particularly for the lodging and retail sectors.

The use of LIBOR as an index is slated to end in just under 13 months but the benchmark administrator has other ideas. One issue: legacy contracts.

Democrats said the Treasury’s decision to end the TALF facility at the end of the year was a political move to prevent the incoming Biden administration from stabilizing the economy.

As president, Joe Biden will have to negotiate with both sides of Congress, limiting sweeping policy changes, according to industry analysts.

Due to the resurgence in coronavirus infections, recovery in the travel and hotel sectors will be even slower than what was expected a few months ago.

The Toronto-based alternative asset manager is tapping the commercial MBS market to finance part of its acquisition of a hotel portfolio.