Commercial MBS values continued to slowly move upward during the week of July 22 as issuers began marketing or prepared to roll out four offerings totaling more than $2.5 billion, according to Commercial Mortgage Alert.
On Friday, Bank of America, Morgan Stanley and CIBC launched an $856-million multi-borrower offering, while an additional two deals close to being launched are also multi-borrower transactions. One is a $1.1-billion offering by RBS, Wells Fargo, National Cooperative Bank, Liberty Island, C-III Commercial Mortgage and Basis Real Estate Capital. The other, led by Deutsche Bank and UBS, is expected to be at least that large.
With the prevailing spread on long-term, super-senior bonds from the latest generation of conduit issues tightening by about 5 basis points (bp) over the past week in the secondary market, these levels will likely be reflected in price guidance on these new issues.
Yesterday, Wall Street dealers were willing to buy such bonds at a spread of roughly 105 bp over swaps and sell them at 100 bp. The bid-ask was about 110-105 bp a week ago, after comparable super-senior bonds from two recent conduit offerings priced July 17 with spreads of 115 bp (GSMS 2013-GC13) and 120 bp (WFCM 2013-LC12).
“Based on the results of CMBS spread tightening, we are seeing spreads to borrowers tighten 15-20 bp to the 250 bp area for commercial assets,” commented Michael D. Sneden, Executive Vice President at ValueXpress. “The new spread levels are providing some relief to borrowers who were shocked at the rapid rate increases that occurred after Ben Bernanke spoke at a press conference on June 19. With the 10-year Swap Rate (Swap) Index hovering around 2.80%, all-in rates to borrowers are in the 5.30% area right now.”