CMBS Pipeline Narrowing after US T-Bond Downgrade
Bloomberg reports: As Standard and Poor’s recent decision to downgrade the US's credit rating played out this past week, commercial real estate analysts opined on how a potential mortgage-bond selloff could affect their industry’s recovery. Three of Bloomberg's contributing writers identified that a slowdown in the CMBS pipeline could occur if more uncertainty grows around the bond ratings of European nations and the US.
“The outlook darkened in the past month amid a selloff in securities linked to debt on properties such as office buildings and retail outlets. Top-ranked commercial mortgage-backed securities yielded about 298 basis points, or 2.98 percentage points, more than Treasuries as of yesterday, according to a Barclays Plc index.” Real Capital Analytics (RCA) Managing Director Dan Fasulo described the spike in yields as “…another hiccup we didn’t need in this recovery.” RCA reported that US commercial property sales increased to $55.6 billion in the second quarter, while offerings were up by 79 percent to $76.2 billion during the same period. A reduction in the amount of available credit would stifle this momentum going into the second half of the year.
Leading CMBS issuers have subsequently revised their forecasts for the second half of this year, including JPMorgan Chase & Co as well as Goldman Sachs, Citigroup, Deutsche Bank, and UBS. The Bloomberg article also stated that a slowdown in CMBS issuance would be especially apparent in the availability of debt in secondary and tertiary markets.
View the full article on Bloomberg: CMBS Pipeline Narrowing after US T-Bond Downgrade
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Posted by: Nina Turner