Articles from Kroll Bond Rating Agency, LLC

KBRA releases research that explores the potential benefits and risks of artificial intelligence (AI) in insurance, along with key governance considerations. AI’s presence across the insurance sector has ramped up materially, with many insurers already implementing AI-driven processes or establishing frameworks to harness its potential. In KBRA’s view, insurers that effectively deploy AI can achieve greater efficiency, increased productivity of agents and employees, and improved customer satisfaction—factors that could positively impact revenues, expenses, and other credit considerations. These benefits could quickly become table stakes, and insurers left behind could find themselves at a competitive disadvantage.

KBRA assigns preliminary ratings to 60 classes of mortgage pass-through certificates from Sequoia Mortgage Trust 2025-2 (SEMT 2025-2), a $548.4 million prime RMBS transaction. The pool is comprised of 466 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 782 and moderate borrower equity, with a WA original LTV of 73.2% and WA original CLTV of 73.2%.

In this quarterly update, we review the more than 2,200 KBRA assessments completed for 1,903 unique middle market (MM)-sponsored borrowers in 2024. These companies collectively account for $922 billion in debt, offering a clear view of the overall private credit direct lending market. We examine key trends shaping credit quality by company size and sector. In addition, we identify and describe the roughly 5% of companies in this portfolio that appear most at risk to default in 2025, given expectations for prolonged base rates, fundamentally weak performance, and limited financial flexibility.

KBRA assigns preliminary ratings to six classes of mortgage pass-through certificates from Verus Securitization Trust 2025-INV1 (VERUS 2025-INV1), an approximately $515.2 million investor cash flow non-prime RMBS transaction. The underlying collateral, comprising 1,337 rental property mortgages, is characterized by a significant concentration of loans underwritten using DSCRs. All the loans were originated for business purpose and are exempt from the Ability-to-Repay (ATR) and TILA-RESPA Integrated Disclosure (TRID) rules.

KBRA assigns preliminary ratings to the Class A Notes, Class B Notes, and Class C Notes issued by Castlelake Aircraft Structured Trust 2025-1, an aviation ABS transaction (CLAS 2025-1). CLAS 2025-1 represents the 11th aviation ABS transaction sponsored by the Company. CLAS 2025-1 will be serviced by Castlelake Aviation Holdings (Ireland) Limited and Castlelake, L.P. The Company is comprised of over 220 individuals operating out of eight offices with headquarters in Minneapolis, Minnesota.

KBRA announces the assignment of preliminary ratings to four classes of IRV 2025-200P, a CMBS single-borrower securitization.

KBRA is pleased to announce the assignment of preliminary ratings to 37 classes of BANK5 2025-5YR13, a $737.1 million CMBS conduit transaction collateralized by 31 commercial mortgage loans secured by 59 properties.

KBRA is pleased to announce the assignment of preliminary ratings to 16 classes of WFCM 2025-C64, a $822.2 million CMBS conduit transaction collateralized by 31 commercial mortgage loans secured by 69 properties.

KBRA releases an update to a KBRA report published in mid-January regarding the Maryland Office of Financial Regulation (OFR) notice of emergency regulations and formal guidance regarding the applicability of Maryland licensing laws to assignees of mortgage loans on properties in Maryland. The rule, issued on January 10, 2025, requires mortgage trusts and their assignees to obtain licenses under Maryland’s Installment Loan Licensing Law and Mortgage Lender Law.

KBRA is pleased to announce the assignment of preliminary ratings to 14 classes of Benchmark 2025-V13, a $767.4 million CMBS conduit transaction collateralized by 35 commercial mortgage loans secured by 120 properties.

KBRA releases research examining solid December retail sales and employment growth. The report evaluates these trends amid moderating but still strong Q4 GDP growth and continued softness in state sales tax receipts.

KBRA assigns preliminary ratings to 12 classes of Velocity Commercial Capital 2025-1 (VCC 2025-1) mortgage-backed certificates.

KBRA assigns preliminary ratings to nine classes of mortgage pass-through certificates from HOMES 2025-NQM1 Trust, an RMBS transaction sponsored by APF II Resi O4B, LLC an investment fund of Ares Alternative Credit Management LLC. The $332.4 million RMBS transaction is collateralized by a pool of 717 residential mortgages, with fixed-rate mortgages (FRMs) and hybrid adjustable-rate mortgages (ARMs) making up 97.4% and 2.6% of the pool, respectively. The deal includes a meaningful concentration of collateral that KBRA considers to be “non-prime” (92.5%), where most loans are either classified as non-qualified mortgages (Non-QM) (51.5%) or exempt (47.4%) from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule due to being originated for non-consumer loan purposes. OCMBC, Inc., dba LoanStream Mortgage (LoanStream; 41.2%), Angel Oak Mortgage Solutions LLC (Angel Oak; 37.1%), and Hometown Equity Mortgage, LLC (Hometown; 15.1%) were the three originators each comprising over 10% of the pool.

KBRA assigns a rating of BBB to Bain Capital Specialty Finance, Inc.'s ("BCSF" or “the company”) $350 million, 5.95% senior unsecured notes due 2030. The rating Outlook is Stable. The proceeds will be used for general corporate purposes and for repayment of existing secured indebtedness.

KBRA assigns preliminary ratings to 62 classes of mortgage pass-through certificates from Citigroup Mortgage Loan Trust 2025-INV1 (CMLTI 2025-INV1), a residential mortgage-backed securities transaction collateralized by non-owner occupied (NOO) investor properties (71.6%) and second homes (28.4%). The loans were predominantly underwritten to agency guidelines (99.9%). The underlying pool consists of 899 fixed-rate mortgages (FRMs) with an aggregate principal balance of approximately $351.9 million as of the cut-off date on January 1, 2025. 39.8% of the loans were sold to the trust by Rocket Mortgage, LLC and 83.9% of the loans will be serviced by Fay Servicing, LLC.

KBRA assigns preliminary ratings to five classes of notes issued by PEAC Solutions Receivables 2025-1 (PEAC 2025-1), an equipment ABS transaction.

KBRA assigns preliminary ratings to four classes of debt issued by VCP RRL ABS IV, LLC (VCP IV), a securitization backed by a portfolio of recurring revenue and middle market corporate loans.

KBRA assigns a AA+, Stable Outlook to Texas Tech University System Board of Regents Revenue Financing System ("RFS") Refunding and Improvement Bonds Series 2025A and RFS Refunding and Improvement Bonds Taxable Series 2025B to be issued on behalf of the Texas Tech University System. Concurrently, KBRA affirms outstanding RFS obligations issued under the Master Resolution and payable from and solely secured by Pledged Revenues of the RFS System.

KBRA releases a report on U.S. commercial mortgage-backed securities (CMBS) loan performance trends observed in the January 2025 servicer reporting period. The delinquency rate among KBRA-rated U.S. private label CMBS in January increased to 6.77%, up 27 basis points (bps) from December’s 6.5%. The total delinquent plus current but specially serviced loan rate (collectively, the distress rate) increased 34 bps to 9.67%. Notably, this month saw a relatively high volume of specially serviced loans, totaling 828.4 million across 28 loans, that were repaid or disposed of. This compares to a monthly average in 2024 of $229.7 million and 10 loans.

KBRA assigns preliminary ratings to five classes of notes issued by Research-Driven Pagaya Motor Asset Trust 2025-1 and Research-Driven Pagaya Motor Trust 2025-1 (collectively “RPM 2025-1”), an auto loan ABS transaction. RPM 2025-1 has initial credit enhancement levels of 50.18% for the Class A notes to 0.45% for the Class E notes. Credit enhancement is comprised of overcollateralization, subordination of junior note classes (except for the Class E notes), a cash reserve account funded at closing, and excess spread.

KBRA assigns preliminary ratings to 72 classes of mortgage-backed securities from Oceanview Mortgage Trust 2025-INV1 (BVINV 2025-1). The transaction is backed entirely by prime, investment-purpose mortgage loans. Approximately 99.1% of the loans in this pool are agency eligible. The BVINV 2025-1 pool consists of 1,147 first-lien, fixed rate mortgages with an aggregate principal balance of approximately $324.6 million as of the January 1, 2025 cut-off date. The pool is characterized by significant borrower equity in each mortgaged property, as evidenced by the WA original LTV of 77.1%. The weighted average original credit score is 760, which is within the prime mortgage range.

KBRA assigns preliminary ratings to four classes of notes issued by Oportun Funding Trust 2025-1 (“Oportun 2025-1”), a $159.144 million consumer loan ABS transaction. Oportun 2025-1 is an amortizing ABS securitization collateralized by a discrete pool of unsecured and secured consumer installment loans originated by Oportun Financial Corporation (“Oportun” or the “Company”).

KBRA assigns a long-term underlying rating of AAA with a Stable Outlook to the Round Rock Independent School District’s (TX) (the “District” or "RRISD:) Series 2025B Unlimited Tax School Building Bonds (the "Bonds"). The credit rating reflects the unlimited nature of the District’s ad valorem property tax pledge and the very strong, diverse economic base that continues to experience rapid growth in its property tax base. The District further maintains strong reserves and a moderate debt profile, aided by accelerated debt paydown in recent years, lowering debt burden in advance of a large capital plan over the upcoming 5-year horizon.

KBRA assigns a long-term rating of AA- to the Triborough Bridge and Tunnel Authority ("TBTA") Subordinate Revenue Bond Anticipation Notes, Series 2025A. The Outlook is Stable. The long-term rating on the three-year notes reflects the TBTA’s role as one of the nation’s largest toll systems and a provider of highly essential transportation infrastructure to the regional New York City economy. Generally low demand volatility, limited competition, and the TBTA’s full toll setting autonomy, bolstered by the State’s non-impairment covenant under the TBTA Act, further underpin the rating.

KBRA comments on RMF Proprietary Issuance Trust 2019-1 (RPIT 2019-1), a securitization of proprietary reverse mortgage loans originated by Reverse Mortgage Funding, LLC (RMF). In 2022, RMF filed for Chapter 11 bankruptcy protection. Subsequently, RPIT 2019-1’s mortgage servicing rights were acquired by Longbridge Financial, and day-to-day servicing continues to be provided by Celink.

KBRA assigns preliminary ratings to Cajun Global, LLC (the Master Issuer) Series 2025-1 (Cajun 2025-1). Cajun 2025-1 represents the Master Issuer's fourth securitization following the establishment of the master trust in 2011. In conjunction with the issuance of the Series 2025-1 Notes, KBRA anticipates affirming the ratings on the Master Issuer’s outstanding notes.

KBRA announces the assignment of preliminary ratings to three classes of HGMT 2025-HGLR, a CMBS single-borrower securitization.

KBRA assigns preliminary ratings to 8 classes of mortgage-backed notes from New Residential Mortgage Loan Trust 2025-NQM1 (NRMLT 2025-NQM1), a $308.0 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 (57.5%) and Champions Funding, LLC (31.3%). In addition, all loans will be serviced by NewRez LLC d/b/a Shellpoint Mortgage Servicing.

KBRA assigns a long-term rating of AAA to the Metropolitan Atlanta Rapid Transit Authority Sales Tax Revenue Bonds, Series 2025A (Green Bonds) and Sales Tax Revenue Bonds, Refunding Series 2025B (Green Bonds). KBRA additionally affirms the long-term rating of AAA for outstanding Sales Tax Revenue Bonds. The rating Outlook is Stable.

KBRA assigns a preliminary rating to the Series A-1 Notes issued by AASET 2025-1 Limited and AASET 2025-1 LLC (together, AASET 2025-1), an aviation ABS transaction. AASET 2025-1 represents the 17th aviation ABS transaction serviced by Carlyle Aviation Management Limited and its affiliates (the Company). The Company is comprised of over 120 individuals operating out of three offices with headquarters in Miami, Florida.

KBRA assigns preliminary ratings to four classes of notes issued by Sunrun Bacchus Issuer 2025-1, LLC. The transaction is collateralized by a diversified pool of 39,458 leases and power purchase agreements (PPAs) associated with residential solar photovoltaic installations (PV Systems), some of which have energy storage equipment. The total aggregate discounted solar asset balance (ADSAB) based on a discount rate of 7.5%, consisting of the discounted payments of the leases and PPAs is approximately $938.7 million. The securitization share of the ADSAB is approximately $827.5 million.

KBRA assigns preliminary ratings to six classes of notes issued by Post Road Equipment Finance 2025-1, LLC (PREF 2025-1), an equipment ABS transaction.

KBRA assigns preliminary ratings to the Series 2025-1 Class A-1-L Notes, Class A-2 Notes, Class B Notes, and Class C Notes (the Series 2025-1 Notes) from Zayo Issuer, LLC (the Issuer), a communications infrastructure securitization.

KBRA announces the assignment of preliminary ratings to two classes of BX 2025-BIO3, a CMBS single-borrower securitization.

KBRA assigns preliminary ratings to 29 classes of mortgage pass-through certificates from Citigroup Mortgage Loan Trust 2025-1 (CMLTI 2025-1), a prime residential mortgage-backed securities transaction collateralized by owner occupied primary, secondary and investor properties. The underlying pool consists of 308 fixed-rate mortgages (FRMs) with an aggregate principal balance of approximately $396.6 million as of the cut-off date on January 1, 2025 and includes both non-agency (98.3%) and agency-eligible (1.7%) loans. 41.7% of the loans were originated by PennyMac Loan Services, LLC and 48.4% of the loans will be serviced by Fay Servicing, LLC.

KBRA assigns a K1 short-term debt rating to the up to $2 billion Unsecured Commercial Paper Notes Program (“CP Notes”) expected to be issued by Air Lease Corporation (NYSE: AL, “the company”), a leading global aircraft leasing company based in Los Angeles, California.

KBRA assigns preliminary ratings to three classes of notes issued by GoodLeap Home Improvement Solutions Trust 2025-1 (“GDLP 2025-1”), a $349.657 million asset-backed securitization collateralized by a pool of residential home improvement loans originated by GoodLeap, LLC ("GoodLeap" or the "Company"). The preliminary ratings reflect the initial credit enhancement levels ranging from 21.06% for the Class A notes to 5.16% for the Class C notes as a percentage of 95% of the pool balance.

KBRA releases research assessing the potential exposure of our rated universe of consumer and commercial asset-backed securities (ABS) to the Los Angeles wildfires, which began on January 7.

KBRA assigns preliminary ratings to 11 classes of notes issued by Pagaya AI Debt Grantor Trust 2025-1 and Pagaya AI Debt Trust 2025-1 (collectively “PAID 2025-1”), an unsecured consumer loan ABS transaction. PAID 2025-1 has initial hard credit enhancement levels of 87.15% for the Class A-1 Notes to 3.25% 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 assigns preliminary ratings to 10 classes of mortgage-backed certificates from Morgan Stanley Residential Mortgage Loan Trust 2025-NQM1 (MSRM 2025-NQM1), a $376.7 million non-prime RMBS transaction. The underlying collateral, comprising of 939 residential mortgages, is characterized by a notable concentration of alternative income documentation (72.6%). The majority of the loans are either classified as non-qualified mortgages (Non-QM) (32.9%) or exempt (58.8%) from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule due to being originated for non-consumer loan purposes.

KBRA is pleased to announce the assignment of preliminary ratings to 18 classes of BBCMS 2025-C32, an $999.7 million CMBS conduit transaction collateralized by 48 commercial mortgage loans secured by 125 properties.

KBRA assigns preliminary ratings to 63 classes from Connecticut Avenue Securities, Series 2025-R01 (CAS 2025-R01), a credit risk sharing transaction with a total note offering of $777,109,000. The pool is characterized by loans with original loan-to-value (LTV) ratios that are greater than 60% and less than or equal to 80%.

Starting with KBRA’s December 2024 U.S. Marketplace Consumer Loan ABS Index report, we will now provide credit performance for all outstanding securitized marketplace consumer loan pools in a unified index. This approach replaces the previous practice of separating credit performance into Tier 1 and Tier 2 indices. This update will be retroactive to the inception of these indices, dating back to March 2018.

KBRA assigns a rating of BBB+ to Blue Owl Credit Income Corp.'s ("OCIC" or “the company”) $400 million, 6.60% senior unsecured notes due September 15, 2029, which are an add-on to the $500 million 6.60% senior unsecured notes with original settlement date of May 14, 2024. The rating Outlook is Stable. The proceeds will be used for general corporate purposes and for repayment of existing indebtedness.

KBRA releases research on the potential impacts of recent Maryland Office of Financial Regulation (OFR) guidance on securitization financing for Maryland loans. The OFR issued a notice of emergency regulations and formal guidance on January 10 regarding the applicability of Maryland licensing laws to assignees of mortgage loans on properties in Maryland. The rule requires all persons engaged in mortgage lending, including mortgage trusts and their assignees, to obtain licenses under Maryland’s Installment Loan Licensing Law and Mortgage Lender Law.

KBRA releases its Day 3 recap of the CRE Finance Council (CREFC) January Conference 2025. The final day consisted of three panel sessions which were "Building on Leverage: Strategic Debt in CRE Financing", "CRE Financing Risk Amid Skyrocketing Insurance Costs," and "The Sunshine State: Opportunities and Challenges in a Booming Market."

KBRA assigns a preliminary rating of "BBB” with Stable outlook to surplus notes (“Notes”) to be issued by Clear Blue Specialty Insurance Company (CBSIC) (KBRA Insurance Financial Strength Rating: A-/Stable). As surplus notes, the Notes are deeply subordinated and payments thereon are subject to the prior approval of the Texas Department of Insurance. If any payments are not approved, the scheduled payment will be extended until approval is given. Interest will continue to accrue on any unpaid principal but interest will not accrue on interest. The surplus notes are being issued to support growth in the company’s business.

KBRA assigns preliminary ratings to nine classes of notes issued by SCF Equipment Leasing 2025-1 LLC and SCF Equipment Leasing Canada 2025-1 Limited Partnership (collectively SCF 2025-1), an equipment ABS transaction.

KBRA is pleased to announce that Gordon Kerr will assume the role of European Macro Strategist, responsible for commenting broadly on market and economic developments and their impact on European and global credit markets.

KBRA assigns preliminary ratings to seven classes of mortgage-backed certificates from Angel Oak Mortgage Trust 2025-1 (AOMT 2025-1), a $342.0 million non-prime RMBS transaction. The underlying collateral, comprised of 631 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 (56.6%) or exempt (43.4%) from the Ability-to-Repay/Qualified Mortgage rule due to being originated for non-consumer loan purposes. Angel Oak Mortgage Solutions originated 43.0% of the pool, with no other originator comprised over 10% of the collateral.

KBRA releases its Day 2 recap of the CRE Finance Council (CREFC) January Conference 2025. Day 2 opened with an Industry Roundtable, which covered a wide range of topics. This was followed by three forums including issuers, investment-grade bondholders, and servicers. The keynote session featured a conversation with Ron Howard who discussed his childhood, media roles, and filmmaking. Rounding out the day’s events were sessions on both legislative developments and lending on alternative commercial real estate (CRE) asset classes. A Young Professionals (YP) session was also held, featuring various YPs from the CRE industry who discussed their roles and responsibilities.

KBRA assigns preliminary ratings to 62 classes of mortgage backed notes from PMT Loan Trust 2025-INV1 (PMTLT 2025-INV1), a prime RMBS transaction sponsored by PennyMac Corp. (PennyMac), an indirect, wholly-owned subsidiary of PennyMac Mortgage Investment Trust (PMT). PMTLT 2025-INV1 comprises 928 fixed-rate mortgages (FRMs) with an aggregate principal balance of $346,620,705 as of the January 1, 2025 cut-off date. The underlying pool consists of agency-eligible loans that are collateralized by investment properties (82.8%) and second homes (17.2%). The pool is characterized by significant borrower equity in each mortgaged property, as evidenced by the WA original LTV of 73.2%. The weighted average original credit score is 775, which is well within the prime mortgage range.

KBRA assigns preliminary ratings to five classes of notes issued by Bridgecrest Lending Auto Securitization Trust 2025-1 (“BLAST 2025-1”), an asset-backed securitization collateralized by a pool of sub-prime auto loans.

KBRA assigns preliminary ratings to five classes of notes issued by Barings Equipment Finance 2025-A (Barings 2025-A), an equipment ABS transaction.

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%).