NEW YORK CITY-In the CMBS world, there’s nowhere to go but up. After hitting rock bottom in 2007, US CRE collateralized debt obligations (CDO) are now showing stability and inching toward recovery, according to a special commercial mortgage report from Fitch Ratings.

“We have been surprised about the speed of the reemergence of the CMBS market and even more surprised by the reemergence of the inquiries about CRE CDOs,” says Huxley Somerville, group managing director at Fitch. This year, the global ratings firm is beginning to receive inquires regarding new CRE CDOs after a near three-year absence.

According to the report, collateral is ranging from seasoned CMBS bonds, newly originated CRE loans and a mishmash of CRE debt. And although CRE CDOs performed poorly during the financial crisis, investors are cautiously optimistic about its reemergence in the marketplace. “This is only speculative, but people are putting some of these pieces on their balance sheet maybe because they believe that there is a good execution now because the markets have come back sufficiently,” Somerville tells GlobeSt.com. “The time is right because people are more comfortable with the story of commercial real estate going forward.”

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