The first multi-borrower commercial MBS offering since mid-2008 was priced on Friday, April 9, as spreads in the secondary market continued to tighten. The $309.7-million offering by RBS and Natixis priced at spreads that were in line with or tighter than initial price talk. The largest tranche — the $221.1-million Class A-2, rated triple-A by Moody’s and Realpoint — was being shopped in the area of swaps plus 90 bp. The buzz is that the 4.9-year class was 1.2 times oversubscribed, a level some observers considered disappointing. But traders said the spread might still tighten a bit. That would put it close to current pricing for 4.6-year bonds from the $400-million issue that Developers Diversified Realty completed via Goldman Sachs in November 2009. That triple-A paper, which originally priced with a 140-bp spread, is now changing hands in the secondary market at just under 85 bp. The four remaining classes — all less than $30 million in size — were oversubscribed several times over. They were being shopped at spreads in the area of 80 bp for a 2.5-year, triple-A class; in the area of 190 bp for a double-A class; in the area of 290 bp for a class with a split rating of Aa2/A from Moody’s and Realpoint; and in the area of 425 bp for a triple-B-minus class. The three junior tranches have five-year average lives. CMBS pros greeted the RBS issue with enthusiasm, saying it gave the market a much needed, if modest boost. It comes at a time when some green shoots are emerging on commercial real estate, but credit-quality woes continue to worsen. Several other dealers are working on multi-borrower transactions, but have found it difficult to amass collateral. There was hope that the completion of the RBS deal would help boost market sentiment.
