Moody's Assigns Provisional Ratings to CMBS Securities from Morgan Stanley Bank of America Merrill Lynch Trust

Strategic Insights -

Moody's Investors Service has issued provisional ratings to eighteen classes of commercial mortgage-backed securities (CMBS) from Morgan Stanley Bank of America Merrill Lynch Trust 2025-C35. The ratings are based on the collateral and the structure of the transaction, with notable strengths including investment-grade structured credit assessments and low leverage loans. The transaction also features above-average market composition, multiple-property loan share, high mortgage debt service coverage ratio (MDSCR), and amortization profile.

Key Takeaways:

  • The CMBS securities are collateralized by 40 fixed-rate loans secured by 65 properties, with a pooled trust loan balance of $597,759,423 representing a Moody's LTV ratio of 101.2%.
  • Moody's assigned a Structured Credit Assessment (SCA) of aaa (sca.pd) to the BioMed MIT Portfolio loan, which represents approximately 10.0% of the pool balance.
  • The Moody's Actual DSCR of 1.65x is above the trailing four quarters (ending 2Q 2025) conduit/fusion transaction average of 1.51x, while the Moody's Stressed DSCR of 1.21x is also above the trailing four quarters (ending 2Q 2025) conduit/fusion transaction average of 1.08x.
  • The transaction features investment-grade structured credit assessments ('SCA"s) and low leverage loans, above-average market composition, multiple-property loan share, high MDSCR, and amortization profile.
  • Notable concerns of the transaction include low pool diversity, high single-tenant share, property type composition, Moody's LTV (MLTV) ratio distribution, and asset-level legal considerations.
  • Moody's graded properties on a scale of 0 to 5 (best to worst) and considers those grades when assessing the likelihood of debt payment, with the pool's weighted average property quality grade being 2.32 (2.50 excluding credit assessed loans).

Statistics:

  • Pooled trust loan balance: $597,759,423
  • Moody's LTV ratio: 101.2% (105.5% excluding credit assessed loans)
  • Moody's Actual DSCR: 1.65x (1.55x excluding credit assessed loans)
  • Moody's Stressed DSCR: 1.21x (1.17x excluding credit assessed loans)
  • Loan level diversity: 20.5 (slightly higher than Moody's-rated transactions during the prior four quarters)
  • Property level diversity: 32.1 (notable diversity in property types and locations)

Sources:

  • Moody's Investors Service (Ratings announcement, 2025)
  • Moody's Ratings Methodology: "US and Canadian Conduit/Fusion Commercial Mortgage-backed Securitizations" (June 2024)
  • Moody's Ratings Methodology: "Moody's Approach to Rating Structured Finance Interest-Only (IO) Securities" (April 2024)
  • Moody's Ratings Methodology: "Rating Methodologies" (available at https://ratings.moodys.com)