Deutsche Bankand Cantor Fitzgerald priced a $1.11-billion CMBS transaction today that found strong demand; it priced at tighter levels than the previous CMBS deal from Wells Fargo and RBS that priced on Tuesday, October 16. The AAA-rated super-senior bonds priced mostly in line with initial pricing guidance at 83 basis points (bp) over swaps and at tighter spreads than comparable paper in the previous Wells/RBS deal that priced at 85 bp. Spreads on the junior AAA-rated bonds priced 5 bp tighter than guidance at 122 bp (13 bp tighter than the RBS/Wells deal), and the AA-rated Class B bonds priced 8 bp tighter than initial guidance at 167 bp (13 bp tighter than the RBS/Wells deal) as investors moved down the credit stack to find decent yield. The class B bonds were 4.5x oversubscribed at the initial guidance level of 175 bp before pricing was tightened to the final pricing level of 167 bp. The deal’s collateral was contributed by Deutsche (48.3%), Cantor (38.6%) and Key Bank (13.1%). The offering is backed by 48 loans, with retail properties representing 40.6% of the collateral pool, followed by office and mixed-use at 24.5% and 14.6%, respectively. Hospitality properties were 12% of the collateral pool.
“The results of this offering continue an extraordinary rally in CMBS and are great news for CMBS borrowers and originators,” commented Michael D. Sneden, Executive Vice President of ValueXpress. “We are seeing another decline in spreads to borrowers of about 5 bp to the swaps-plus-225-240 range for a conduit loan with a 10-year term, resulting in interest rates less than 4.5% and close to 4.0% for lower leverage commercial deals.”