Magazine article Mortgage Banking

Some CMBS Bumps Ahead

Magazine article Mortgage Banking

Some CMBS Bumps Ahead

Article excerpt

The rest of 2016 will likely be as "bumpy" as the first half was for commercial mortgage-backed securities (CMBS), said Brian Olasov, executive director with Carlton Fields, New York.

Trepp LLC, New York, said early 2016 "fell squarely into the ugly category" as investors grew anxious about prospects for China's continued economic growth, falling oil prices and the first Fed rate hike, which pushed fixed-income spreads wider.

"CMBS conduit shops all but shut down in January in the face of widening bond spreads," Trepp's The Good, the Bad and the Ugly CMBS research report said. Spreads on last cash-flow AAA bonds, which started the year at 162 basis points more than swaps, grew to the low 170s in early March before the market stabilized, the report said.

"The slowdown put a dent in the initial high expectations for 2016 CMBS issuance," Trepp said. New CMBS issuance fell nearly 40 percent below last year's pace as of late May.

Meanwhile, prices of loans underlying the CMBS universe declined in May, loan marketplace DebtX, Boston, reported. During May the estimated price of whole loans securing CMBS decreased to 98. …

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