With the Federal Reserve signaling that a possible rate cut could be coming at its mid-September meeting, lower borrowing costs could set the stage for increased CMBS private label issuance. Already through August, on a year-to-date (YTD) year-over-year (YoY) comparison, issuance is up 23.9%. Single borrower (SB) deals continue to lead the charge (12 of 14 deals in August) which, based on our current visibility, could continue into September as up to 10 SB, six conduit, three commercial real estate (CRE) collateralized loan obligations (CLO), and one Freddie Mac K-Series (Agency) deal could launch in the month.
The August conduit benchmark last cash flow (LCF) AAA class was at an average of swaps (S) +77 basis points (bps) based on the two conduit deals that were priced between S +76 bps and S +78 bps. One conduit was a five-year deal and the other was a 10-year deal.
Rating Activity
In August, KBRA published pre-sales for three deals ($1.5 billion), including two SB ($1.1 billion) and…