Kroll Bond Rating Agency is developing a research business to monitor the performance of commercial mortgage-backed securities (CMBS), adding a recurring-revenue stream to its credit-rating division.
The service will be funded by investors and provide monthly updates on the debt. The research, which is expected to become available in June, will provide loan-level commentary and won’t include letter grades. The ratings company, founded by Jules Kroll in 2010, will compete with a similar service from Morningstar Inc. New York-based Kroll hired employees away from its competitor to help create the new business.
Morningstar moved into the ratings business with its 2010 purchase of Realpoint LLC, which has monitored the securities since 2001. The research fills a void from the biggest ratings companies, such as Standard & Poor’s and Moody’s Investors Service, which typically do annual reviews that don’t include much detail on loan specifics, Brooks said.
“We’re committed to servicing our clients and improving our product,” said Joe Petro, a Morningstar managing director for marketing and sales. Unlike Kroll, Morningstar’s monitoring service rates the securities.
Underwriting standards are slipping as competition between lenders intensifies amid surging issuance. Sales of bonds tied to commercial-property loans doubled to $80 billion last year, according to data compiled by Bloomberg.