Morgan Stanley is set to buy about $700 million of the shuttered Signature Bank's CRE loans from a group including Blackstone Inc., Canada Pension Plan Investment Board and Rialto Capital, Bloomberg reported. A large transaction raising bigger questions of what might be happening.

To try and understand what is happening, step back in time to last year. Signature Bank was one of three — the others being Silicon Valley Bank and First Republic Bank — closed by the Federal Deposit Insurance Corporation when it and other regulators became alarmed at how the institutions had not hedged the possibility of rising interest rates. Large volumes of bond assets purchased when interest rates were low under dovish monetary strategies lost significant value when the Federal Reserve started pushing rates upward to battle inflation.

The FDIC put $33 billion in Signature's CRE loan portfolio, mostly multifamily and almost half the full value rent-stabilized or rent-controlled, up for sale in September 2023.