Some Find CMBS Options Limited

Joe Clements is co-editor of Debt and Equity Journal, from which this article is excerpted.

Chicago—Forecasts for the US debt market are more troublesome than they have been in a decade, and commercial mortgage-backed securities specialist William T. Barry joins other industry experts fretting that even swift action from the Federal Reserve will not be enough to turn industry fortunes over the near term. CMBS buyers have become decidedly hesitant to accept paper hinting of risk, Barry says, and that has curbed production because lenders are loathe to warehouse notes long-term.

“Conditions are much worse than three months ago,” the principal at Chicago-based Draper and Kramer tells Debt & Equity Journal. He adds that uncertainty about spread direction is further disrupting the CMBS pipeline.