After only one issue at the beginning of August, the CMBS market is preparing for a flurry of deals in September and October. CMBS conduit shops are expected to team up, mainly with their usual partners; in September, the market can expect deals from JPMorgan/CIBC, UBS/Barclays, RBS/Wells Fargo, Goldman Sachs/Citigroup and Deutsche Bank. In October, Morgan Stanley/Bank of America and JP Morgan are expected to have deals ready to market. Total issuance is expected to approximate $8 billion.
With year-to-date 2012 issuance of $25 billion essentially flat with 2011, the surge in issuance will position the market to exceed full-year 2011 issuance of $36 billion, perhaps landing in the $40-$45 billion range, the largest issuance since the market resumed in 2010.
“It will be interesting to see if the new supply provides upward pressure on spreads,” said Michael D. Sneden, Executive Vice President of ValueXpress. “In the last three deals, investment-grade classes were oversubscribed and we had our allocations cut by 75%. Perhaps there will be enough bonds to go around this time.”
UBS and Barclays figure to be first out of the gate as their deal is expected to begin marketing right after Labor Day, but the RBS/Wells and JPMorgan deals will be right on the heels of the UBS deal.