2022 Private-Label CMBS and CRE CLO Issuance Summary and 2023 Outlook
January 9, 2023
Private-label CMBS and CRE CLO issuance ended 2022 at $100.5 billion, down 36% from $156.0 billion in 2021. Elevated rates and unending market volatility resulted in one of the more challenging years for the CRE securitized debt markets, with issuance pressured across all segments:
- Conduit issuance ended the year at $24.0 billion, down 24% from $31.4 billion in 2021;
- SASB issuance ended the year at $46.2 billion, down 42% from $79.1 billion in 2021; and
- CRE CLO issuance ended the year at $30.3 billion, down 33% from $45.4 billion in 2021.
Market volatility is expected to continue as we enter 2023, with the rising interest rate environment top of mind for most. Lenders and investors are hoping for clarity on the magnitude of future increases after the Federal Reserve raised rates seven times in 2022 to tame historic inflation. Starting from near-zero in March, the Federal Open Market Committee (FOMC) lifted its benchmark rate through successive meetings to a target range of 4.25% to 4.5%, the highest since 2007.
Minutes from the FOMC’s December meeting, released last week, affirmed a resolve to bring down inflation toward their 2% target. In a post-meeting press conference, Fed Chair Powell said the committee has “more work to do,” explaining that how high rates rise and how long the Fed holds them there was more important than the pace at which officials reach that destination.
“We’re waiting and watching,” said Alan Todd, Head of US CMBS Research at Bank of America, “We all know the direction; just a matter of the magnitude.” According to a survey of market pros conducted by Commercial Mortgage Alert, issuance is expected to slide again in 2023. The survey, which includes forecasts from lenders, researchers, and investors, expects issuance to decline 5% in 2023 to $95.1 billion.