CMBS loans have taken significant shocks since early in 2022. According to Kroll Bond Rating Agency (KBRA), that's going to continue, and possibly accelerate, into the new year.

More uncertainty, higher mortgage rates, reduced leverage, and lower CRE transaction volume have all contributed to questions about "meaningful property value declines," Larry Kay, senior director in the CMBS surveillance group at KBRA, said in an interview with the Mortgage Banker's Association (MBA) newsletter. Many market participants are in a "holding pattern."

"All these factors, as well as expected rising interest rates, will weigh on private label issuance, which we believe will be meaningfully lower, tracking the 2022 quarterly downtrend into the new year," Kay said. KBRA expects a total 2023 CMBS issuance of $71 billion, down 29% year-over-year from the firm's 2022 issuance forecast of $100 billion. "By transaction type, we forecast YoY conduit volume to be basically flat, while SB/LL and CRE CLO will be lower by 31.2% and 41.4%, respectively."