North American CMBS Interest in Arrears: April 2025

North American commercial mortgage-backed security (NA CMBS) structures allow for interest shortfalls; as such, there are classes of NA CMBS certificates where interest payments are in arrears, but the cumulative or ongoing interest shortfall is expected to be ultimately recovered and repaid.

This commentary includes three tables that list the classes of debt that are continuing to experience interest in arrears/shortfalls, classes of debt that have started to experience interest in arrears/shortfalls, and classes of debt whose interest in arrears/shortfalls have been removed or repaid. For classes of debt with ratings of CCC or lower, Interest in Arrears is not considered a meaningful designation and is not typically used. Bonds rated CCC and lower are in danger of defaulting on financial obligations as noted in Morningstar DBRS Long Term Obligations Rating Scale. Similarly, classes that have interest shortfalls that arise because of minor trust/issuer expenses, in line with the Default Definition, also may not carry the Interest in Arrears designation.