KBRA Affirms and Upgrades Ratings from 19 Velocity Commercial Capital Transactions

KBRA recently reviewed the outstanding ratings for 19 Velocity Commercial Capital (VCC) small balance commercial transactions issued between 2017 and 2024, resulting in 271 rating affirmations and three rating upgrades. The related transactions are listed below with links to their transaction pages reflecting the applicable rating actions. The affirmations reflect generally stable collateral and structure performance, as evidenced by increased credit support for rated classes and minimal losses since issuance. The rating upgrades considered each bond’s increased credit support relative to KBRA’s updated loss expectations, as well as the generally positive performance trends exhibited by the related underlying pool since issuance.

KBRA performed its analysis in accordance with the methodologies listed under Related Publications below, with the “General Global Rating Methodology for Asset Backed Securities” being applicable only to VCC 2024-2. In performing these rating actions, KBRA considered transaction performance to date, updated home values via home price indexation, updated expected loss estimates, and capital structure behavior under various cash flow stress scenarios, where applicable. The rating actions, along with related deal and tranche performance information, are available in spreadsheet form in the accompanying KBRA VCC Surveillance KCAT report.

Certain transactions listed below may have experienced losses and/or interest shortfalls. However, KBRA notes that none of the rated classes have experienced losses, and the interest shortfalls have not been of a size or duration such that it would prompt rating actions at this time.

We note that, in general, these assets and liabilities can have long weighted average lives and structural features that provide for changes in payment priority over time. KBRA often considers seasoning in determining the extent of positive rating actions effectuated in a manner that also considers a transaction’s structure. This includes features such as the remaining size of more senior certificates, principal payments to subordinate tranches, and credit enhancement floor provisions. These features are weighed against, among other things, the tenor of the rated classes and the length of performance history associated with the collateral pool. In light of these considerations, KBRA has taken the rating actions as discussed above, determining that the rated classes we’re able to withstand the rating stresses applied within an acceptable tolerance.

For additional information regarding a specific transaction, see the list below to access ratings, new issue reports, and disclosures:

For additional information regarding a specific transaction, see the list below to access ratings, reports, and disclosures:

Related Publication

Methodologies