CMBS buyers returned to the market to gobble up the latest wave of multi-borrower offerings – four deals totaling more than $4 billion. Furthermore, prices generally tightened on each issuance. Now, new-issue prices on benchmark paper from commercial MBS offerings have retraced almost half of their recent decline.
This week, the long-term, super-senior bonds from a fifth offering, a $1.24-billion offering by Goldman Sachs, Jeffries, Five Mile Capital, Citigroup and Starwood (GSMS 2013-GCJ14), is being shopped at 98-100 basis points (bp) over swaps, slightly tighter than the comparable bonds from a $1-billion offering by Cantor Fitzgerald, Deutsche Bank, KeyBank and UBS (COMM 2013-CCRE10) that priced August 1 at 100 bp over swaps, the tightest spread seen since early June. Those benchmark bonds had been shopped with price guidance of 105-110 bp. Equivalent paper from the previous two conduit issues priced July 17 at 115 bp (GSMS 2013-GC13) and 120 bp (WFCM 2013-LC12).
Also on August 1, the benchmark bonds in an $856.3-million offering by Bank of America, Morgan Stanley and CIBC (MSBAM 2013-C11) priced at 105 bp, which was 5 bp tighter than talk.
Further down the capital stack, Class B CMBS tightened in tandem with the long-term, super-senior bonds, as the Class Bs from the Goldman deal are being shopped at 175 bp, down from 215 bp on the Wells Fargo deal and 190 bp on the most recent Cantor deal.
“Based on the results of CMBS spread tightening, we are seeing spreads to borrowers tighten another 10-15 bp to the 235 bp area for commercial assets and 260 bp area for hotels,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “With the 10-year Swap Rate (Swap) Index hovering around 2.80%, all-in rates to borrowers are falling toward the 5% area right now.”