The assessments from Moody's and Morningstar are in line with the North American structured finance outlook provided by Fitch Ratings earlier this month. For CMBS, Fitch sees a “mostly stable” rating outlook on Fitch-rated transactions, “with performance clearly delineated among origination vintages.”

Circa-2006 and '07 multi-borrower loans will be the most volatile next year, says Fitch. Investment-grade tranches should experience minimal rating actions as Fitch has already taken into account potential refinance issues in its current ratings. “However, non-investment-grade tranches, will be more volatile as unanticipated loan performance, either good or bad, affect more concentrated pools,” according to Fitch. The ratings agency sees the outlook for post-2009 multi-borrower deals “mostly stable up and down the capital structure.”

NEW YORK CITY—Ratings agencies are giving the CMBS outlook a mixed report card, with Moody's Investors Service saying Monday that property-level fundamentals will continue recovering unevenly across property sectors and metropolitan areas. At Morningstar Credit Ratings, the forecast calls for a payoff rate between 50% and 60% in 2017 as heavily leveraged legacy CMBS loans face difficulties refinancing.

Given lower CMBS issuance, tighter underwriting standards and the uncertainty around risk-retention rules taking effect on Wednesday also may hamper refinancing borderline 2007 loans into CMBS deals, Morningstar said Monday. The ratings agency added that selection bias will further stress the repayment rate, as many stronger-performing loans to mature next year have paid off already.

Across the five major property types, retail and office, which represent 63.6% of loans by balance maturing in '17, will struggle with refinancing, “as fewer than half are conservatively leveraged with loan-to-value ratios below 80%,” according to Morningstar. Retail occupancy rates have stabilized, thanks in part to limited new supply; “however, we caution against minimizing the effects of the ongoing shift toward online retailing, as the footprints of office supply chains, electronics retailers and department stores continue to shrink.” Similarly, Morningstar is predicting that the office payoff rate, which stands at 69.0% for the year through November, will sink lower next year “because a substantial portion of office-backed loans remains overleveraged.”

As part of a global structured-finance outlook report that calls for stable credit quality for new securitizations amid “tepid” growth, Moody's notes that on a market-by-market basis, legislative initiatives will provide a headwind for some CMBS deals and a tailwind for others. “For some metro areas and property types, the recovery will lag interest rate increases, putting near-term pressure on prices,” according to Moody's.

The assessments from Moody's and Morningstar are in line with the North American structured finance outlook provided by Fitch Ratings earlier this month. For CMBS, Fitch sees a “mostly stable” rating outlook on Fitch-rated transactions, “with performance clearly delineated among origination vintages.”

Circa-2006 and '07 multi-borrower loans will be the most volatile next year, says Fitch. Investment-grade tranches should experience minimal rating actions as Fitch has already taken into account potential refinance issues in its current ratings. “However, non-investment-grade tranches, will be more volatile as unanticipated loan performance, either good or bad, affect more concentrated pools,” according to Fitch. The ratings agency sees the outlook for post-2009 multi-borrower deals “mostly stable up and down the capital structure.”