On June 19, Deutsche Bank and Cantor Fitzgerald priced the benchmark class of a $996.3-million multi-borrower CMBS conduit offering at the tightest spread in more than a year. The benchmark class of the Deutsche-Cantor deal priced at 78 basis points (bp) over swaps. That was 1 bp tighter than the spread on the long-term, super-senior class of the multi-borrower CMBS conduit offering led by J.P. Morgan that priced on June 12 and at the tightest level since February 2013. The benchmark class priced at 79 bp over swaps. The last time the CMBS market achieved that level was on February 5, 2013 when a multi-borrower issue led by Morgan Stanley and Bank of America priced at 72 bp over swaps, which was the lowest level since the restart of the CMBS market in 2010.
The other investment-grade classes in the Deutsche-Cantor deal, rated by S&P, Fitch and DBRS, priced generally in line with price talk and at spreads that ranged from 3 bp more to 5 bp less than the comparable tranches of the JPMorgan offering.
Next up is a multi-borrower conduit deal backed by $1.3 billion of commercial mortgages contributed by J.P. Morgan, Barclays, MC-Five Mile, Starwood Mortgage Capital and RAIT Financial. Price guidance for the transaction is expected to be released before the July 4th holiday.
“We are seeing a gradual decline in spread on new borrower applications,” noted Michael D. Sneden, Executive Vice President at ValueXpress. “Together with declines in the swap rate, all-in borrower interest rates are very attractive, approaching the lowest levels since the restart of CMBS in 2010.”