NEW YORK CITY—CMBS issuance began 2017 at a sluggish pace, but may now finish out the year with total issuance close to or exceeding $90 billion, says Kroll Bond Rating Agency. However, KBRA's outlook report for next year sees cooler temperatures in the forecast.

While acknowledging that it was difficult not to be influenced by the recent environment for new issuance, KBRA senior director Larry Kay says the rating agency expects private-label CMBS issues to taper to about $65 billion, in line with the historical mean. “We expect that single borrower issuance will remain in line with '17, but conduit issuance may fall as much as 30%,” Kay says.

Moreover, single-borrower deals in 2018 may come with increased leverage, judging by recently priced deals. This is especially true in securitizations backed by office properties; Kay notes that of the 17 single-borrower New York City office deals that KBRA rated between 2012 and 2016, only three had KBRA loan-to-values greater than 100%. In 2017, on the other hand, KTLVs exceeded 100% on five of the seven NYC office transactions KBRA has rated this year.