3.18.15: CMBS Market Update – Prices Steady

The benchmark bonds in a $1.3-billion conduit offering led by Deutsche Bank and Cantor Fitzgerald priced at 86 basis points (bp) over swaps on Wednesday, March 18, matching the second-tightest level so far this year. The spread on long-term, super-senior bonds has pretty much hovered between 86 bp and 88 bp since late February.

Earlier in the year, the benchmark AAA-rated class had ballooned in excess of 90 bp over swaps as the decline in the 10-year swap rate required dealers to increase spreads to provide CMBS investors a minimum return. This pattern reversed course in recent weeks, as the 10-year swap rate moved from a low of 1.82% on January 30 to 2.35% on March 6. The swap rate then began to decline once again, to 2.13% by March 18, when Deutsche Bank and Cantor Fitzgerald priced its CMBS offering.

Most classes in the Deutsche deal (COMM 2015-CCRE22) priced in line with guidance. But dealers encountered buy-side resistance on two subordinate classes. The double A-minus notes went for 147 bp, after being shopped at the 140-bp area, and the triple-B-minus paper fetched 340 bp, up from price talk of 330-335 bp.

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This entry was posted in CMBS, CMBS Securities, Commercial Mortgage-Backed Securities, Michael D. Sneden, News & Recent Closings, The Banker's Mortgage Conduit, Valuexpress and tagged . Bookmark the permalink.

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