Articles from Kroll Bond Rating Agency, LLC

KBRA assigns preliminary ratings to 20 classes of mortgage-backed notes from RCKT Mortgage Trust 2025-CES1 (RCKT 2025-CES1), a $549.6 million RMBS transaction, as of the cut-off date, sponsored by Woodward Capital Management LLC, a wholly owned affiliate of Rocket Mortgage, LLC, and FirstKey Mortgage, LLC, and consists entirely of newly originated closed-end second lien mortgages (CES; 100.0%). The underlying pool is seasoned less than one months in average and comprises of 6,226 loans originated solely by Rocket Mortgage, LLC (Rocket). The collateral is characterized entirely by fully amortizing, fixed-rate mortgages (FRMs) with 10-year (4.9%) and 20-year (95.1%) terms.

KBRA assigns preliminary ratings to ten classes of mortgage pass-through certificates from CROSS 2025-H1 Mortgage Trust, an RMBS transaction issued under the Hildene-CCC Loan Acquisition, LLC (CROSS) shelf, where Hildene Capital Management (Hildene) in affiliation with CrossCountry Mortgage (CrossCountry or CCM) and CrossCountry Capital (CCC) sponsored the transaction. The $515.3 million transaction is collateralized by a pool of 991 residential mortgages originated by CCM, including a meaningful concentration of collateral that KBRA considers to be “non-prime” (65.6%), with fixed-rate mortgages (FRMs) and hybrid adjustable-rate mortgages (ARMs) making up 82.3% and 17.7% of the pool, respectively.

KBRA releases its Day 1 recap of the CRE Finance Council (CREFC) January Conference 2025. CREFC returned to Miami for its annual January conference, drawing an audience of over 2,300 attendees. The organization serves 425 member firms across the commercial real estate (CRE) finance landscape. Members and nonmembers alike flock to Miami each year for the event, which serves as a forum for professionals to share insights and observations across the various facets of the industry.

KBRA releases research that considers the themes that matter for private credit in 2025.

On January 10, 2025, Clearfield, PA-based CNB Financial Corporation (NASDAQCCNE) (“CNB”), parent company of CNB Bank, and Stroudsburg, PA-based ESSA Bancorp, Inc. NASDAQ: ESSANASDAQESSA)

KBRA assigns a rating of BBB to Blue Owl Technology Finance Corp. ("OTF" or "the company") $650 million, 6.100% senior unsecured notes due March 15, 2028. The rating Outlook is Stable.

KBRA assigns preliminary ratings to four classes of notes issued by Reach ABS Trust 2025-1 (“Reach 2025-1”), an unsecured consumer loan ABS transaction. Credit enhancement consists of overcollateralization, subordination of junior note classes (except for the Class D notes), a cash reserve account funded at closing, and excess spread.

KBRA releases research assessing the impact of the Los Angeles wildfires on the California insurance market. Over the last several days, the Los Angeles area has experienced unprecedented wildfire activity, with multiple outbreaks across the region. The lack of measurable rainfall in recent months, combined with over 100 mph wind gusts, made Los Angeles County particularly vulnerable to this type of natural disaster. Containment of the fires remains limited, with some areas facing challenges due to insufficient water pressure to combat the flames. Thousands of homes and buildings have already been destroyed, and evacuation orders remain for certain areas.

KBRA assigns a long-term rating of AAA to the Dallas Independent School District, TX: Multi-Modal Unlimited Tax School Building Bonds, Series 2025A; Unlimited Tax School Building and Refunding Bonds, Series 2025B; and, Unlimited Tax Refunding Bonds, Series 2025C. KBRA additionally affirms the long-term rating of AAA for the District's outstanding Unlimited Tax Bonds (PSF) and Unlimited Tax Bonds (Non-PSF). The Outlook for each obligation is Stable.

With wildfires still burning in the Los Angeles area, KBRA is tracking real property leased assets of the City associated with various series of KBRA-rated lease revenue bonds issued by the Municipal Improvement Corporation of Los Angeles (“MICLA”).

KBRA releases research assessing potential exposure of our rated universe of commercial real estate (CRE) securitizations to the unfolding events surrounding the wildfires in Los Angeles, which began on January 7. At least four major wildfires continue to burn in Los Angeles County, threatening lives and thousands of homes and businesses, and forcing residents to evacuate. The fires have already scorched nearly 30,000 acres, destroying several thousand homes and other structures. County officials have issued evacuation orders for nearly 180,000 people in areas in or near Glendale and Pasadena (Eaton Fire), San Fernando (Hurst Fire, north-northwest of Burbank), Tuna Canyon Park (Palisades Fire, between Malibu and Santa Monica), and the area just north of West Hollywood (Sunset Fire).

KBRA assigns preliminary ratings to seven classes of mortgage pass-through certificates from EFMT 2025-NQM1, a $269.6 million non-prime RMBS transaction. The underlying collateral, comprising 738 residential mortgages, is characterized by a notable concentration of alternative income documentation, with 85.0% of the loans underwritten using bank statements, DSCR, and asset underwriting documentation types. Approximately 55.2% of the loans were categorized as non-qualified mortgages (Non-QM), the remaining loans (45.8%) were categorized as exempt from the ATR/QM rule having been originated for a business purpose (i.e., investment properties).

KBRA releases research in response to potential exposure of our rated universe of residential mortgage-backed securities (RMBS) to the unfolding events surrounding the wildfires in Los Angeles, California, which began on January 7.

KBRA is assigning preliminary ratings to the Series 2025-1 Class A-2 Notes, Class B Notes, and Class C Notes (the Series 2025-1 Notes) from Uniti Fiber ABS Issuer LLC (the Lead Issuer) and Uniti Fiber TRS Issuer LLC (the Co-Issuer), a communications infrastructure securitization.

KBRA assigns preliminary ratings to four classes of notes issued by OneMain Direct Auto Receivables Trust 2025-1 (“ODART 2025-1”), an auto loan ABS transaction.

KBRA assigns preliminary ratings to 24 classes from Freddie Mac Structured Agency Credit Risk (STACR®) REMIC 2025-DNA1 Notes, Freddie Mac STACR REMIC Trust 2025-DNA1 (STACR 2025-DNA1), a credit risk sharing transaction with a total note offering of $675,500,000. STACR 2025-DNA1 features loans with loan-to-value (LTV) ratios greater than 60%, but less than or equal to 80%. The Offered Notes represent obligations of the STACR 2025-DNA1 Trust in a credit-linked note structure governed by a credit protection agreement between the trust and Freddie Mac, with payments subject to the credit and principal payment risks of the STACR 2025-DNA1 Reference Pool.

KBRA releases a slide deck that summarizes key points for its 2025 Aviation ABS Outlook and examines major trends from the past year as well as expectations for 2025.

KBRA releases a report on payoff rates of 2024 loan maturities in U.S. commercial mortgage-backed securities (CMBS). Just over 85% of U.S. CMBS loans maturing in 2024 successfully refinanced, a notable decrease from the 94% of maturing loans paid off in 2023 (see 2023 CMBS Loan Maturities: Better by Count). The payoff percentage by loan balance also declined, albeit by a smaller margin, dropping to 66.6% from 71.8%. This trend, consistent with last year, suggests that larger loans continue to face greater refinancing challenges compared to smaller loans.

KBRA releases the December 2024 issue of the KBRA CMBS Loss Compendium, which provides loss estimates for all KBRA-rated conduit transactions. In this report and its accompanying spreadsheet, KBRA provides insight into loss estimates for 361 outstanding conduit transactions and includes lifetime realized losses for nine conduits with withdrawn ratings owing to payoffs.

KBRA assigns preliminary ratings to four classes of notes issued by Lendbuzz Securitization Trust 2025-1 (“LBZZ 2025-1”), an auto loan ABS transaction. The preliminary ratings reflect the initial credit enhancement levels ranging from 22.20% for the Class A notes to 5.75% for the Class C notes. Credit enhancement on the notes is comprised of overcollateralization, subordination of junior note classes (except for the Class C notes), a cash reserve account funded at closing, and excess spread.

KBRA assigns preliminary ratings to six classes of mortgage pass-through notes from Verus Securitization Trust 2025-1 (VERUS 2025-1), a $553.2 million non-prime RMBS transaction. The underlying collateral, comprised of 1,178 residential mortgages, is characterized by a significant concentration of loans underwritten using alternative income documentation. Borrowers in the subject pool possess a non-zero WA original credit score of 743 and exhibit moderate equity in each mortgaged property, with an original combined LTV (CLTV) ratio of 69.8%. Most of the loans are classified as exempt (41.9%) from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule due to being originated for non-consumer loan purposes. The remaining loans are classified as QM: Safe Harbor (APOR) (28.8%), Non-QM (25.5%), or QM: Rebuttable Presumption (APOR) (3.8%).

KBRA assigns preliminary ratings to five classes of notes issued by Oportun Issuance Trust 2025-A (“OPTN 2025-A”), a $301.167 million consumer loan ABS transaction. OPTN 2025-A is a revolving ABS securitization collateralized by unsecured and secured consumer installment loans originated by Oportun Financial Corporation (“Oportun” or the “Company”). During the 12-month revolving period, eligible loans can be acquired into the securitization trust so long as they comply with the transaction's concentration limits and eligibility criteria.

KBRA releases the December 2024 issue of CMBS Trend Watch.

KBRA is pleased to announce the assignment of preliminary ratings to 14 classes of WFCM 2025-5C3, a $833.5 million CMBS conduit transaction collateralized by 30 commercial mortgage loans secured by 63 properties.

KBRA assigns a long-term rating of AA+ to the Department of Water and Power of the City of Los Angeles Water System Revenue Bonds, and affirms the AA+ rating on outstanding parity Water System Revenue Bonds. The Outlook is Stable.

KBRA is pleased to announce the assignment of preliminary ratings to 16 classes of ACREC 2025-FL3, a managed CRE CLO securitization with the ability to reinvest principal proceeds for 30 months including a 180-day ramp-up period.

KBRA assigns preliminary ratings to 60 classes of mortgage pass-through certificates from Sequoia Mortgage Trust 2025-1 (SEMT 2025-1), a $562.8 million prime RMBS transaction. The pool is comprised of 477 first-lien, fully amortizing fixed rate mortgages with 20-years or 30-years maturity terms. The collateral is characterized by a weighted average (WA) original credit score of 778 and moderate borrower equity, with a WA original LTV of 72.0% and WA original CLTV of 72.0%.

KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the December 2024 servicer reporting period. The delinquency rate among KBRA-rated U.S. private label CMBS in December increased to 6.5%, up 55 basis points (bps) from November. The total delinquent plus current but specially serviced loan rate (collectively, the distress rate) also increased by a slightly lower 38 bps to 9.33%. With another month of increases in hand, the 2024 delinquency and distress rates ended the year meaningfully up from 4.21% and 6.65% at year-end 2023, respectively.

KBRA assigns preliminary ratings to seven classes of mortgage-backed notes from OBX 2025-NQM1 Trust, a $618.4 million non-prime RMBS transaction. The underlying collateral, comprising 1,058 residential mortgages, is characterized by a notable concentration of alternative income documentation (86.1%) loans. Most of the loans are classified as non-qualified mortgages (Non-QM) (53.1%) or exempt (33.9%) from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule due to being originated for non-consumer loan purposes.

KBRA assigns a rating of BBB- to Crescent Capital BDC, Inc.'s (“CCAP” or “the company”) $115 million senior unsecured notes due in 2028 and 2030. The notes comprise a $35 million, 6.77% tranche and an $80 million, 6.90% tranche with maturities of February 18, 2028, and February 18, 2030, respectively. The rating Outlook is Positive. The notes are being issued in anticipation of 2026 unsecured note maturities.

KBRA assigns a rating of BBB to FS KKR Capital Corp.'s (“FSK” or “the company”) $100 million, 6.125% senior unsecured notes due January 15, 2030, which are an add-on to the $600 million, 6.125% senior unsecured notes with original settlement date of November 20, 2024. The rating Outlook is Stable. The proceeds will be used for general corporate purposes and for repayment of existing indebtedness.

KBRA releases research discussing solid November retail sales growth, the slowly fading labor market, and the stubborn persistence of inflation. This report examines these developments in light of still softening state sales tax receipts and the Federal Reserve's decision to further cut rates in December.

KBRA assigns a long-term rating of AA to the Triborough Bridge and Tunnel Authority Real Estate Transfer Tax Revenue Bonds, Series 2025A (TBTA Capital Outlook Fund). The Outlook is Stable. The rating reflects KBRA's positive view of i) the non-appropriation pledge and statutory dedication of New York City Real Estate Transfer Tax ("RETT") receipts transferred monthly by the State Comptroller to the Central Business District Tolling Capital Lockbox Fund held by TBTA; ii) the sound legal and security provisions of the credit structure; iii) the solid, though volatile, trend of coverage of maximum annual debt service (capped at $150 million) over the four year timeframe of actual receipts; and iv) TBTA's statutory inability to file for bankruptcy protection, and the inability of creditors to file involuntary proceedings against TBTA during the pendancy of the Bonds. Counterbalancing these strengths are the lack of at least five years of historical RETT receipts, and the volatility of annual sales volumes and unit sales subject to the RETT.

On December 9, 2024, Rockland, MA-based Independent Bank Corp. (NASDAQINDB) (“Independent”), parent company of Rockland Trust Company (“Rockland Trust”), and Lowell, MA-based Enterprise Bancorp, Inc. NASDAQ: EBTCNASDAQEBTC)

KBRA assigns preliminary ratings to nine classes of mortgage pass-through certificates from J.P. Morgan Mortgage Trust 2024-NQM1 (JPMMT 2024-NQM1), a $373.3 million non-prime RMBS transaction collateralized by a pool of 734 residential mortgages, with fixed-rate mortgages (FRMs) and hybrid adjustable-rate mortgages (ARMs) making up 94.1% and 5.9% of the pool, respectively. All loans are either classified as non-qualified mortgages (Non-QM) (74.5%) or exempt (25.5%) from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule due to being originated for non-consumer purposes. Although JPMMAC has previously issued deals 100% backed by DSCR loans, this transaction is notable in that it represents the company's first non-QM securitization where not all of the loans were originated for investment purposes.

On December 16, 2024, Berkshire Hills Bancorp, Inc. (NYSEBHLB)(KBRA senior unsecured debt rating: BBB / Stable Outlook), the parent company of Berkshire Bank, and Brookline Bancorp, Inc. NASDAQ: BRKLNASDAQBRKL)

KBRA releases its third-quarter 2024 U.S. Credit Union Compendium, providing the latest view of the U.S. credit union (CU) sector and analysis of 3Q24 results for KBRA-rated CUs.

KBRA assigns issuer and senior unsecured debt ratings of BBB to Morgan Stanley Direct Lending Fund (NYSE: MSDL or "the company"). The rating Outlook is Stable.

KBRA assigns preliminary ratings to three classes of notes issued by ABPCI Direct Lending Fund ABS V LLC ("ABPCI V"), a securitization backed by a portfolio of recurring revenue loans, middle market loans, and hybrid asset-based loans.

KBRA is pleased to announce a new HELOC/CES index that tracks new issue private label securitizations (PLS) backed by home equity lines of credit and closed-end second mortgages. HELOC and CES now account for roughly 4.5% of outstanding private label securitizations (PLS) tracked in KBRA’s U.S. RMBS Credit Indices. With the issuance of transactions backed by these assets likely to rise in 2025, we are introducing a HELOC/CES index to KBRA’s RMBS Credit Indices report, which tracks early- (30-59 days), mid- (60-89 days), and late-stage (90+ days) delinquencies, observed modifications, prepayment speeds, and other performance metrics across the major RMBS 2.0 subsectors.

KBRA announces the assignment of preliminary ratings to six classes of BX 2024-SLCT, a CMBS single-borrower securitization.

KBRA assigns preliminary ratings to 61 classes of mortgage pass-through certificates from PMT Loan Trust 2024-INV2 (PMTLT 2024-INV2), a prime RMBS transaction sponsored by PennyMac Corp. (PennyMac), an indirect, wholly-owned subsidiary of PennyMac Mortgage Investment Trust (PMT). PMTLT 2024-INV2 comprises 1,301 fixed-rate mortgages (FRMs) with an aggregate principal balance of $468,088,481 as of the December 1, 2024 cut-off date. The underlying pool consists of agency-eligible loans that are collateralized by investment properties (73.6%) and second homes (26.4%). The pool is characterized by significant borrower equity in each mortgaged property, as evidenced by the WA original LTV of 73.4%. The weighted average original credit score is 774, which is well within the prime mortgage range.

KBRA is pleased to announce the assignment of preliminary ratings to 13 classes of Benchmark 2024-V12, a $752.2 million CMBS conduit transaction collateralized by 31 commercial mortgage loans secured by 164 properties.

KBRA assigns preliminary ratings to 9 classes of mortgage pass-through certificates from ADMT 2024-NQM6, a $303.9 million non-prime RMBS transaction. The underlying collateral, comprising 872 residential mortgages, is characterized by a significant concentration of loans underwritten using alternative income documentation. Borrowers in the subject pool possess a non-zero WA original credit score of 743 and exhibit notable equity in each mortgaged property, with a WA combined LTV (CLTV) ratio of 69.5%.

KBRA assigns preliminary ratings to 10 classes of mortgage-backed certificates from Morgan Stanley Residential Mortgage Loan Trust 2024-NQM5 (MSRM 2024-NQM5), a $297.2 million non-prime RMBS transaction. The underlying collateral, comprising of 574 residential mortgages, is characterized by a notable concentration of alternative income documentation (71.7%). The majority of the loans are either classified as non-qualified mortgages (Non-QM) (44.0%) or exempt (43.0%) from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule due to being originated for non-consumer loan purposes.

KBRA assigns a long-term rating of AA+ to the Massachusetts Bay Transportation Authority Subordinated Sales Tax Bonds 2024 Series A (USDOT Loan) Widett Circle Preservation of Right-of-Way and Site Preparation Project (RRIF 2025-0053). KBRA additionally affirms the long-term rating of AAA for the Authority's Senior Sales Tax Bonds. The rating Outlook is Stable.

KBRA assigns preliminary ratings to two classes of notes issued by OWN Equipment Fund I LLC (OWN or the Issuer), an equipment rental ABS transaction.

KBRA assigns preliminary ratings to ten classes of mortgage pass-through certificates from CROSS 2024-H8 Mortgage Trust, an RMBS transaction issued under the Hildene-CCC Loan Acquisition, LLC (CROSS) shelf, where Hildene Capital Management (Hildene) in affiliation with CrossCountry Mortgage (CrossCountry or CCM) and CrossCountry Capital (CCC) sponsored the transaction. The $403.4 million transaction is collateralized by a pool of 824 residential mortgages originated by CCM, including a meaningful concentration of collateral that KBRA considers to be “non-prime” (68.9%), with fixed-rate mortgages (FRMs) and hybrid adjustable-rate mortgages (ARMs) making up 85.2% and 14.8% of the pool, respectively.

KBRA assigns preliminary ratings to 20 classes of mortgage-backed notes from RCKT Mortgage Trust 2024-CES9 (RCKT 2024-CES9), a $451.4 million RMBS transaction, as of the cut-off date, sponsored by Woodward Capital Management LLC, a wholly owned affiliate of Rocket Mortgage, LLC, and FirstKey Mortgage, LLC, and consists entirely of newly originated closed-end second lien mortgages (CES; 100.0%). The underlying pool is seasoned less than one months in average and comprises of 5,142 loans originated solely by Rocket Mortgage, LLC (Rocket). The collateral is characterized entirely by fully amortizing, fixed-rate mortgages (FRMs) with 10-year (5.5%) and 20-year (94.5%) terms.

KBRA assigns preliminary ratings to seven classes of mortgage-backed certificates from Angel Oak Mortgage Trust 2024-13 (AOMT 2024-13), a $288.9 million non-prime RMBS transaction. The underlying collateral, comprised of 627 residential mortgages, is characterized by a significant concentration of loans underwritten using alternative income documentation. All the loans are either classified as non-qualified mortgages (55.9%) or exempt (44.1%) from the Ability-to-Repay/Qualified Mortgage rule due to being originated for non-consumer loan purposes. Together, Angel Oak Mortgage Solutions and Angel Oak Home Loans, both entities of Angel Oak, originated 36.1% of the pool. No other originator comprised over 15% of the collateral.

KBRA releases its Business Development Company Ratings Compendium, which looks at results for the quarter ended September 30, 2024. This quarter, KBRA reviewed the financial performance of our rated BDCs in a landscape characterized by ongoing competitive pressures, increasing payment-in-kind (PIK) optionality, declining but still high base interest rates, and the potential for distribution/common dividend cuts. We also evaluated asset quality, noting higher unrealized and realized losses for some BDCs despite consistently low non-accrual rates. In 3Q24, the market environment remained characterized by low transaction volumes, significant capital raises by new private credit vehicles, and a strong broadly syndicated loan (BSL) market supported by an active collateralized loan obligation (CLO) market.

KBRA assigns a long-term rating of AAA to the Dormitory Authority of the State of New York State Sales Tax Revenue Bonds, Series 2024B-1 (Tax-Exempt), Series 2024B-2 (Tax-Exempt), and Series 2024C (Federally Taxable). Concurrently, KBRA affirms the long-term rating of AAA on outstanding State Sales Tax Revenue Bonds. The Outlook is Stable.

KBRA assigns preliminary ratings to Jersey Mike's Funding, LLC (the Issuer), Series 2024-1 (Jersey Mike's 2024-1). Jersey Mike's 2024-1 represents the Issuer's third securitization following the establishment of the master trust in December 2019. KBRA anticipates affirming the ratings on the Issuer’s outstanding notes (the Existing Notes and, together with the Series 2024-1 Notes, the Notes).

KBRA assigns a BBB insurance financial strength rating to Universal Life Insurance Company (ULICO). The outlook for the rating is stable. ULICO is an insurance operating entity of Universal Group, Inc., a holding company offering both non-life and life insurance as well as other related services in Puerto Rico.

KBRA releases the November 2024 issue of CMBS Trend Watch.

KBRA releases research on the key takeaways from the 29th annual United Nations Climate Change Conference of the Parties (COP29), held on November 11-22 in Baku, Azerbaijan. The report highlights major developments at COP29, including progress in climate finance, evolving debates over fossil fuels, and ongoing challenges in balancing equity and global collaboration.

KBRA assigns preliminary ratings to 12 classes of Velocity Commercial Capital 2024-6 (VCC 2024-6) mortgage-backed certificates.

KBRA assigns a short-term rating of K1+ to Cobb County School District, Georgia's Short-Term Construction Notes, Series 2025, due December 15, 2025. Proceeds will be applied toward the current expenses of acquiring, constructing, equipping and upgrading various school facilities and improvements approved by voters at referendum, and to pay expenses related thereto until the collection of a 1% sales and use tax for educational purposes (the "Sales Tax", or "Ed-SPLOST").

KBRA assigns preliminary ratings to seven classes of mortgage-backed notes from OBX 2024-NQM18 Trust, a $479.7 million non-prime RMBS transaction. The underlying collateral, comprising 841 residential mortgages, is characterized by a notable concentration of alternative income documentation (84.9%) loans. Most of the loans are classified as non-qualified mortgages (Non-QM) (53.8%) or exempt (43.2%) from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule due to being originated for non-consumer loan purposes.

KBRA assigns preliminary ratings to 8 classes of mortgage-backed notes from New Residential Mortgage Loan Trust 2024-NQM3 (NRMLT 2024-NQM3), a $272.5 million non-prime RMBS transaction sponsored by Rithm Capital Corp. (formerly New Residential Investment Corp.), a publicly traded (NYSERITM) real estate investment trust (REIT). The underlying mortgages in the subject pool were originated by NewRez LLC (71.4%) and Champions Funding, LLC (12.2%). In addition, all loans will be serviced by NewRez LLC d/b/a Shellpoint Mortgage Servicing.

KBRA assigns preliminary ratings to 6 classes of Certificates from EFMT 2024-CES1, a $203.1 million RMBS transaction, as of the cut-off date, sponsored by EFMT Sponsor LLC and consists entirely of newly originated closed-end second lien mortgages (CES; 100.0%). The underlying pool is seasoned approximately 4 months and comprises 2,450 loans originated solely by PennyMac Loan Services, LLC (PennyMac). The collateral is characterized entirely by fully amortizing, fixed-rate mortgages (FRMs) with predominantly 20-year (78.4%) and 30-year (19.6%) maturity terms.

KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the November 2024 servicer reporting period. The delinquency rate among KBRA-rated U.S. private label commercial mortgage-backed securities (CMBS) in November increased to 5.95%, up 46 basis points (bps) from October. The total delinquent plus current but specially serviced loan rate (collectively, the distress rate) also increased by a slightly lower 30 bps to 8.95%. The jump in rates were driven by a second consecutive month of increases exceeding 100 bps in the office delinquency rate and another $1 billion+ of newly distressed office loans, pushing the overall distress rate in the sector to over 14%.

KBRA assigns preliminary ratings to six classes of mortgage pass-through notes from Verus Securitization Trust 2024-9 (VERUS 2024-9), a $612.3 million non-prime RMBS transaction. The underlying collateral, comprised of 1,289 residential mortgages, is characterized by a significant concentration of loans underwritten using alternative income documentation. Borrowers in the subject pool possess a non-zero WA original credit score of 742 and exhibit moderate equity in each mortgaged property, with an original combined LTV (CLTV) ratio of 70.2%. Most of the loans are classified as exempt (39.5%) from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule due to being originated for non-consumer loan purposes. The remaining loans are classified as QM: Safe Harbor (APOR) (33.0%), Non-QM (24.4%), or QM: Rebuttable Presumption (APOR) (2.7%).

KBRA assigns preliminary ratings to nine classes of notes issued by Pagaya AI Debt Grantor Trust 2024-11 and Pagaya AI Debt Trust 2024-11 (collectively “PAID 2024-11”), an unsecured consumer loan ABS transaction. PAID 2024-11 has initial hard credit enhancement levels of 71.14% for the Class A Notes to 3.17% for the Class F Notes. Credit enhancement is comprised of overcollateralization, subordination (except for the Class F Notes), a cash reserve account funded at closing, and excess spread.

KBRA is pleased to announce the assignment of preliminary ratings to 13 classes of BMO 2024-5C8, a $991.8 million CMBS conduit transaction collateralized by 40 commercial mortgage loans secured by 98 properties.

KBRA is pleased to announce the assignment of preliminary ratings to 15 classes of BBCMS 2024-5C31, an $872.5 million CMBS conduit transaction collateralized by 39 commercial mortgage loans secured by 55 properties.

KBRA is pleased to announce the assignment of preliminary ratings to four classes of FREMF Series 2024-K167 mortgage pass-through certificates and three classes of Freddie-Mac structured pass-through certificates (SPCs), Series K-167. FREMF 2024-167 is an $1.2 billion CMBS multi-borrower transaction. Freddie Mac will guarantee six classes of certificates issued in the underlying Series 2024-K167 securitization and will deposit the guaranteed underlying certificates into a separate trust that will issue the SPCs.

KBRA releases an updated report that tracks several reported metrics within recurring revenue loan (RRL) securitizations.

KBRA assigns a long-term rating of AAA with a Stable Outlook to Dallas Independent School District, TX's (“DISD” or the “District”) outstanding Unlimited Tax School Building and Refunding Bonds. The long-term credit rating reflects the District’s strong financial management policies and practices guided by an experienced leadership team, favorable financial operating performance supporting solid reserve and liquidity levels, a mature and diverse economic base that has experienced continued growth, particularly in terms of its property taxing base, and what KBRA considers to be a well-managed and conservative debt profile. These strengths are counterbalanced, in part, by a continued trend of enrollment decline.

KBRA releases research discussing October retail sales growth, recent headwinds to employment growth, and the recent uptick in inflation. The report examines these developments in the context of still softening state sales tax receipts and mixed signals from large retailers on expectations for sales growth this holiday season.

KBRA assigns an ‘A-’ rating to the Senior Notes issued by NPC SIP 2024-1 Ltd. (the “Issuer”), a long-dated, General Partner-led Collateralized Fund Obligation (GP CFO) transaction. The total issuance amount is $427 million, resulting in an initial Loan-to-Value ratio of approximately 85.7% for the Senior Notes. NPC SIP 2024-1 Ltd. will be managed by Churchill Asset Management, who will utilize Nuveen and Arcmont Asset Management to invest in private credit and private equity strategies. This transaction will have a legal maturity of 30 years with a 25-year investment period to allocate proceeds into various assets.

KBRA assigns preliminary ratings to five classes of notes issued by Continental Finance Credit Card ABS Master Trust, Series 2024-A (“CFCCMT Series 2024-A”), a credit card asset-backed securitization.

KBRA assigns a rating of BBB to MSD Investment Corp.'s ("MSD" or "the company" or "the BDC") $265 million senior unsecured notes that are comprised of three tranches. The three tranches include a $50 million SOFR +3.00% floating rate note due May 20, 2028, a $165 million 7.11% fixed rate note due May 20, 2030, and a $50 million SOFR + 3.35% floating rate note due May 20, 2030. The rating Outlook is Stable. The proceeds will be used to make new investments and to pay down existing debt.

KBRA assigns preliminary ratings to four classes of notes issued by Golub Capital Partners ABS Funding 2022-1 (GCPAF 2022-1), a securitization backed by a portfolio of recurring revenue and middle market corporate loans.

KBRA releases its 2025 ABS Sector Outlook, which discusses our expectations for new issue supply in 2025 and provides our views on credit fundamentals among each of the major sectors where KBRA is most active. We also discuss year-to-date (YTD) KBRA-rating trends and metrics, take a closer look at 2024 ratings activity, and provide our expectations for 2025, including factors that may affect credit performance.