NEW YORK CITY-The subtitle of a Standard & Poor's Ratings Service report on the CMBS credit outlook speaks volumes: "The Calm Before the Maturity Storm." Between 2015 and 2017, about $287 billion of loans are due to mature, and 2014 is likely to see further improvement in the credit landscape, although possibly less of it than we saw in 2013.

This year, with the Federal Reserve going into "tapering mode," long-term interest rates are expected to rise, S&P notes. This could affect borrower costs and behavior, capitalization rates and refinancing prospects.

Further, S&P notes that property appreciation might slow "as capitalization rates stabilize/expand, which could affect the refinancing of upcoming maturities." Using the CoStar Index as a yardstick for vintage-year property prices, 2004-vintage loan maturities, which represent 74% of the total for the year, have prices that are "slightly lower"—1.4%—since they were originated.

"As the start of the maturity wave begins in 2015, 2005 vintage year loan collateral will need appreciation growth of about 19% from current prices to be at the same price level as when these loans were originated," according to S&P's report, prepared by credit analyst Larry Kay. "The 2015 maturities will include about $73 billion, which is more than two and one-half times the amount of 2014 maturities," the report states.

The report forecasts that REO sales will increase this year, "as special servicers liquidate REO properties in advance of the looming 2015-2017 maturities" on the more aggressively underwritten loans from the cycle's peak. This, the report says, "could keep the loss severity rate from making much progress."

On the other hand, S&P expects fewer loans to become newly delinquent this year, continuing a downward trend seen in '13. This would provider special servicers with an opportunity to "chip away at the REO block," according to S&P.

The ratings agency is projecting CMBS delinquency to drop below 6% by the end of this year; it was 7.91% as of this past Dec. 31. All property types currently have single-digit delinquency rates.

Weighted average coupons for '05-vintage loans averaged about 5.43%, which is close to current originated conduit coupons. "So if the 10-year Treasury rate doesn't significantly jump between now and 2015, which our economists don't expect, then the coupon differential should not be a refinancing obstacle," according to S&P. Nonetheless, next year's maturities "will still need to cope with higher leveraged '05 vintage year loans and value declines since origination."

The maturity payoff rate this year could be pressured by "the more aggressively underwritten 2007 vintage maturing loans," which represent 19% of this year's scheduled maturities. As a result, S&P expects that the fixed-rate maturity payoff rate for '14 could be less than the results that were achieved in '13. In addition, based on current prices, '07 vintage maturities will need a property value increase of approximately 24% "to be at the same price level as when these loans were originated," according to S&P's report.

On a positive note, S&P said that ratings upgrades outnumbered downgrades in the fourth quarter of last year, and expects this ratio to continue improving through 2014, thanks to improving collateral performance. Additionally, mortgage defeasances are expected to remain strong, "which could positively affect ratings, as borrowers take advantage of higher property values."