At least three CMBS multi-borrower conduit issues totaling $3.2 billion are expected to be brought to market in the next week or so. These offerings are the first since August 10th and follow a relatively slow summer period for CMBS issuance.
The largest of the new deals is a $1.4-billion offering led by Morgan Stanley (BANK 2018-BNK14). A second deal led by Deutsche Bank, J.P. Morgan and Citigroup is a $1.1-billion transaction (BMARK 2018-B6). And a third deal led by UBS is a $700.9-million offering (UBSCM 2018-C13).
The benchmark Super-senior triple-A-rated class of the BANK deal was being marketed at price guidance of 80-82 basis points (bp) over swaps. That was down from the range of 86-91 bp seen in early August on equivalent tranches of long-term super-seniors in the last four conduit issues.
Industry pros chalked up the anticipated spread contraction to pent-up demand for newly issued CMBS bonds. They also noted a recent uptick in U.S. Treasury rates, which could make it easier for CMBS dealers to achieve tighter spreads while still hitting bond buyers’ targets for absolute yields on triple-A bonds. The yield on 10-year government bonds stood at 2.96% yesterday — up from 2.87% on August 10, when the last conduit issue priced.