30 May 2024

Unrealized Losses (or Gains) in U.S. Banking System for Q1

INCREASE

$517 billion

Barchart

@Barchart

BREAKING : U.S. Banks Unrealized losses in the U.S. Banking System increased to $517 billion in Q1

5:37 PM · May 29, 2024

384K

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Losses Pile Up in Top-Rated Bonds Backed by Commercial Real Estate Debt...Loan defaults could reach Great Depression-era levels if rates stay high

For the first time since the financial crisis, investors in top-rated bonds backed by commercial real estate debt are getting hit with losses.

Industry analysts warn of more pain to come in safest CMBS

A National Bureau of Economic Research paper warned commercial real estate loan defaults could reach Great Depression-era levels if rates stay high.

14,652 views Jan 1, 2024 #yahoofinance #youtube #realestate

USC Finance Professor Erica Jiang discussed the risks on Yahoo Finance Live.

Jiang noted falling property cash flows, declining values, and refinancing challenges raising distress, especially for offices, multifamily, and hotels.
She says "rising interest rates make it very difficult" to refinance, causing rollover issues.

With 15% of commercial loans already underwater presently, Jiang notes default outlooks now "don't look very good."

She highlighted offices as particularly exposed, with 45% of office loans underwater, meaning the property value is below the loan amount.
This makes refinancing unlikely as it "has high default risks."