Morgan Stanley priced $774.7 million of commercial mortgage securities via the conduit MSCI 2015-MS1.
Kroll Bond Ratings Agency, Moody’s Investor Service and DBRS assigned triple-A ratings to the super senior notes, structured with 30% credit enhancement. The benchmark, 10-year triple-A bonds pay swaps plus 93 basis points and yield 3.42%.
MSCI 2015-MS1, is backed by 53 commercial mortgage loans that are secured by 59 properties. Leverage for the overall pool is lower than the last 20 CMBS conduits rated by Kroll over the past six months. The Kroll-adjusted weighted average (WA) loan-to-value (KLTV) ratio of 97.5% compared to the average KLTV of 102.8% of the last 20 CMBS conduits.
MSCI 2015-MS1 is heavily exposed to retail properties (41.9%). The properties are most heavily concentrated in New York (26.4%) and California (20.9%).
A key strength of the pool is its high primary market exposure at 72.6%. This is higher than any of the previously rated CMBS conduit by Kroll, which averaged 45.8% over the past six months. The diverse economies of primary markets are more likely to withstand fluctuations and potential downturns in the national economy.
Eight loans in the pool (21.3%) have existing additional debt and/or permit future additional debt. By comparison, this is lower than the average exposure to such loans in the previous 20 conduits rated by Kroll, which was 22.9%. The lower aggregate debt burden decreases borrow insolvency risk.