RBS and Wells Fargo priced a $1.1-billion CMBS transaction on November 1 that found strong demand. With the crisis in Greece appearing to settle down and the capital markets recovering some lost ground during the week, the transaction found strong demand, driven largely by investors returning from the sidelines.
The entire RBS-Wells offering, backed by 75 mortgages on 98 properties, was placed with investors. Similar to other recent CMBS issues, the issue has a heavy concentration of loans on retail properties, which comprise 46% of its collateral pool. Hospitality properties, including a loan contributed by ValueXpress, were 12.5% of the collateral pool.
The $763.8 million of super-senior notes, with 30% of subordination, priced with spreads 5-10 basis points (bp) tighter than guidance. The deal’s largest class encompassed $471 million of super-senior bonds with a weighted average life of 9.7 years. That paper went for 145 bp over swaps, down 5 bp from price talk.
The $85.9-million class of junior triple-A notes with a 9.8-year term and 22.13% of subordination was pre-sold to an undisclosed investor. The going rate in the secondary market is 325-350 bp for comparable paper from recent issues.
Among the remaining subordinate classes with investment-grade ratings, two tranches of those 9.9-year notes priced at substantially tighter spreads than initial talk. The double-A bonds went out the door with a 425-bp spread, down from talk in the range of 450-475 bp. The single-As priced at 525 bp, down from 575-600 bp. The triple-B-plus bonds went for 675 bp, at the tight end of price talk. However, lackluster demand at the most-junior level forced the issuers to boost the spread on the triple-B-minus class 35 bp to 835 bp.