In December, the CRED iQ CRE CLO distress rate rose by 60 basis points, reaching a record high of 13.8%. This was driven by a flat delinquency rate of 11.8% for collateralized loan obligations and an increase in special servicing rate by 180 basis points to reach 9%.
According to CRED iQ’s analysis, over half (61.9%) of CRE CLO loans have a Net Cash Flow (NCF) below the required minimum DSCR level of 1.00 NCF – up from last month’s figure of59.2%. The NCF is an important factor in determining the strength and creditworthiness of a loan.
Among all metro areas, Indianapolis-Carmel continues to have the highest distress rate at70.6%, although this is down from November’s figure which sawa decreaseof270basispointsforCRECLOloansin some formofdistress.
The overall distress rate reported by CRED iQ includes any loans that are either past their maturity date or are currently experiencing delinquency for more than30 days,specialservicingoracombofboth.Thisisanimportantindicatoroffinancialhealthandcreditqualityforagivenloan.
