The senior spreads on a $2.1-billion CMBS offering by UBS, Deutsche Bank and Ladder Capital are shaping up to be slightly tighter than those on another multi-borrower issue that priced last week.
The second offering of the year from this trio of lenders is slated soon, following another week of volatility in the financial markets that caused CMBS spreads to fluctuate in the secondary market.
As for the conduit issue led by UBS and Deutsche, the largest class consists of $831.5 million of triple-A bonds with a weighted average life of 9.8 years. Those bonds were being shopped yesterday at 140 basis points (BP) over swaps. That was 8 BP lower than the spread on comparable bonds from a $1.2-billion multi-borrower issue that Morgan Stanley and Bank of America (BofA) priced on June 9, amid a selloff in the stock and bond markets.
Price talk from UBS and Deutsche on the other two senior, fixed-rated classes of their offering was 100 BP for $257.8 million of five-year paper and 140 BP for $568.7 million of 4.9-year notes. The smaller class ranks first in line for principal payments on distribution dates. The larger tranche is more similar to the 4.9-year bonds from the triple-A portion of the Morgan-BofA deal, which priced at 147 BP.
Unlike the Morgan-BofA deal, the offering led by UBS and Deutsche includes $116.1 million of senior floating-rate bonds. The anticipated spread on the 6.7-year floaters is 105 BP over one-month Libor.
Many investors concurred with the price talk on the senior notes from UBS and Deutsche, and some expressed a preference for the collateral when compared with the Morgan-BofA deal. But market participants said it was proving more difficult to place the deal’s subordinate paper at the suggested spreads. Some buy siders predicted that price guidance on the junior bonds, all of which have 9.9-year terms, would have to be widened by as much as 25 BP.
