September Looking Good for CMBS Market

RICHMOND, VA-Despite a less-than-stellar August, things have continued to move along at a significant pace with commercial mortgage-backed securities, as the market edges closer to a record-breaking quarter. And September could be the jewel in the crown, as per Barron’s/John B. Levy & Co. National Mortgage Survey, which anticipates approximately $9 billion in domestic issues from eight scheduled CMBS transactions for the month of September. The quarter could end with a total of $12 billion. First up for this month is a 100-loan, $1 billion securitization, Power 2, to be led by Bear Stearns, Wells Fargo and Prudential.

Looking back at August, two securitizations of $850 million and $1.15 billion–led by Wachovia, and JP Morgan and Merrill Lynch, respectively–produced spread widening, particularly on the triple-A faction of the deals, which produced an increase of five basis points over the prior transaction. Looking ahead, triple-B rated classes are expected to come out ahead, with a possible tightening by a projected 5 to 10 basis points.