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KBRA Forecasts “Elevated” CMBS Distress Along with Rising Issuance in 2026
Even as Kroll Bond Rating Agency (KBRA) expects 2026 CMBS issuance to reach a post-2008 high of $183 billion, up 18% from 2025, the rating agency also expects distress to continue rising. “Moderating borrowing costs and stabilizing property fundamentals, together with liquid capital markets and sustained investor demand, supported robust issuance in 2025,” KBRA reported. “While we expect these conditions to continue driving issuance in 2026, the elevated volume of distressed loans will likely lead to more negative than positive rating actions.”
KBRA said the loan distress rate (30+ days delinquent plus current but specially serviced loans) climbed to 10.9% in October 2025, up from 9.3% at year-end 2024 and 6.7% at YE 2023 across conduit and single-borrower transactions. The office sector was the biggest driver of the increase, with a 17.4% distress rate in October, up from 14.8% at YE 2024 and 8.6% at YE 2023.
“We expect the distress rate to continue to rise into 2026 before flattening out later in the year, with higher issuance volumes helping to moderate the overall rate,” KBRA reported.
