- CMBS Market: "The amount issued in the first five months of this year fell 89 per cent to $10.8bn, the lowest level since the late 1990s, according to Commercial Mortgage Alert. Overall issuance last year was $253bn."
- Issuance in CMBS: "has dropped as banks suffering from subprime writedowns held off from new loans. Yields on the bonds soared to record highs in March this year amid frantic selling, and as hedge funds as well as owners went short on them in anticipation of a commercial real estate doomsday. Soaring yields made borrowing via the CMBS market prohibitively expensive."
- New Wave of CMBS: "Show lower loan-to-value ratios and subordination – the cushions protecting bond-holders from losses – is deeper at the top of the capital structure, adding protection to the safest tranches of debt and boosting investors’ confidence."
- Analysts Expect Volume to Pick Up: "this year partly because it takes three to four months to complete the securitisation process – but not to return properly until next year. In the end, the drastic contraction in the CMBS market is not seen as disastrous, with property markets expected to return to their level in 2003-4."
CMBS Packages: Appears to be forging a more transparent product with along with wider cushions protecting the bond holders. This is a trend I believe we will soon see across the board in all the Fix Income Market Security packages.
CMBS Pricing: Higher interest rates, De-Leveraging of balance sheets, and slower economic activity on a world wide basis don't indicate a near term stabilization in pricing or increase in new CMBS production.
Jim
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