Posted Jan 05, 2012
Written By:
By Malay Bansal
A year ago around this time, the mood among commercial mortgage-backed securities market participants was quietly optimistic. Estimates of new issuance for 2011 generally ranged from $35 billion to more than $70 billion, on the way to $100 billion again in a few years. Over the course of the year, however, the optimism faded. New issuance totaled just $30 billion in 2011 and forecasts are not much higher for 2012.
With more conservative underwriting, higher subordination levels from rating agencies, and wider spreads, new issue CMBS was expected to be attractive to investors. Yet, investors seem to have pulled back and spreads have widened for both legacy and new issue deals. Macro level issues, especially uncertainty about Europe, are part of the reason. However, CMBS spreads have been far more volatile than other sectors including corporate and other ABS.
As the table below shows, even new issue ....
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