Market Overview

KBRA Assigns Preliminary Ratings to BDS 2018-FL2


Kroll Bond Rating Agency (KBRA) is pleased to announce the assignment of
preliminary ratings to six classes of BDS 2018-FL2, a $420.0 million
commercial real estate collateralized loan obligation (CRE CLO)
securitization with the post-closing ability to acquire pari passu
companion participations related to the closing date assets. The
transaction is expected to be collateralized by 19 commercial mortgage
assets, consisting of 12 pari passu participations (70.5%), six whole
loans (26.9%), and one senior participation (2.6%) backed by a total of
23 properties. Seventeen loans (77.2%) are secured by the borrowers' fee
simple interests and two loans (22.8%) are secured by the borrowers'
leasehold interests in the related mortgaged properties.

The transaction permits the acquisition of companion participations
related to the initial assets for a 24 month period following the
closing date. In addition, defaulted and impaired assets can be sold to
the preferred shareholder at par at any time. The transaction also
includes an interest coverage (IC) test and an overcollateralization
(OC) test. If the tests are not satisfied on any determination date, on
the following payment date, interest proceeds remaining after the
payment of interest to the Class D notes (and principal proceeds, to the
extent interest proceeds are insufficient) will be used to pay down the
principal balances of the Class A through D notes in sequential order
until the test(s) are satisfied or such classes of notes are paid in

KBRA's analysis of the transaction involved a detailed evaluation of the
underlying cash flows using our CMBS Property Evaluation Methodology and
the application of our US CMBS Multi-Borrower Rating Methodology. The
analysis resulted in KBRA's values to be, on average, 40.3% and 50.5%
lower than the appraiser's as-is and stabilized values, respectively.
The resulting in-trust KBRA Loan to Value (KLTV), assuming that all
future advance obligations were fully funded, was 135.3%. We also
conducted scenario analyses to evaluate and incorporate the impact of
the transaction's various structural features in our ratings assignment

For complete details on the analysis, please see our pre-sale report, BDS
published at
The preliminary ratings are based on information known to KBRA at the
time of this publication. Information received subsequent to this
release could result in the assignment of ratings that differ from the
preliminary ratings.

Preliminary Ratings Assigned: BDS 2018-FL2

Class     Initial Note Balance     Expected KBRA Rating
A     $223,136,000     AAA(sf)
B     $26,251,000     AA-(sf)
C     $26,251,000     A-(sf)
D     $38,326,000     BBB-(sf)
E     $17,851,000     BB-(sf)
F     $21,001,000     B-(sf)
Preferred Shares     $67,205,001     NR

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required,
pursuant to SEC Rule 17g-7, to provide a description of a transaction's
representations, warranties and enforcement mechanisms that are
available to investors when issuing credit ratings. KBRA's disclosure
for this transaction can be found in the report available here.

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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
recognized by the National Association of Insurance Commissioners as a
Credit Rating Provider and a certified Credit Rating Agency (CRA) by the
European Securities and Markets Authority (ESMA). Kroll Bond Rating
Agency Europe Limited is registered with ESMA as a CRA.

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