Kroll Bond Rating Agency Europe Limited (KBRA) releases research regarding UK CMBS transactions. The UK government passed on 25 March a package of measures to support businesses impacted by the coronavirus (COVID-19) pandemic, including a measure to protect commercial tenants from eviction. The measure will allow tenants to defer rent in March and June. In addition, while landlords will be entitled to take steps to recover deferred rent once the protective period ends, it now seems likely that a significant number of tenants, particularly from the retail sector, will negotiate for outright rent holidays.
While these developments pose the risk that some UK commercial real estate loans will experience a failure to pay, the willingness and ability of sponsors to make debt service payments will reduce risks at loan level. Even if there was a failure to pay, bond level structural features such as liquidity facilities and deferrable interest should insulate bondholders from the direct effects.
As events surrounding the crisis unfold, our thoughts are with the individuals and families who have been affected by the virus.
Click here to view the report.
Related Publications
- Coronavirus (COVID-19): Taurus 2019-3 UK DAC and Potential Implications
- Coronavirus (COVID-19): Kanaal CMBS Finance 2019 Retail Exposure
- Salus (European Loan Conduit No. 33) DAC Surveillance Report
- Scorpio (European Loan Conduit No. 34) DAC Pre-Sale Report
- Taurus 2019-3 UK DAC Pre-Sale Report
About KBRA and KBRA Europe
KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA. Kroll Bond Rating Agency Europe Limited is located at 6-8 College Green, Dublin 2, Ireland.
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Contacts:
Analytical Contacts
John Hogan
+44 208 148 1040
jhogan@kbra.com
Matthew Horner, Director
+353 1 588 1240
mhorner@kbra.com
Yee Cent Wong, Senior Managing Director
+1 (646) 731-2374
ywong@kbra.com
Business Development Contact
Mauricio Noé, Senior Managing Director
+44 208 148 1010
mnoe@kbra.com
