Conduit lenders are competing for investors’ business, offering progressively lower interest rates and larger loans to commercial real estate borrowers, according to worried bond underwriters at Moody’s Investors Service.
“Spreads have come in … some lenders are offering more leverage,” says Tad Philipp, director of commercial real estate research for Moody’s and co-author of a report “U.S. Q1 2012 Review: Q2 Poised to See More Highly Leveraged Collateral Pools, Increased Subordination Levels.”
In the second quarter, Moody’s expects to rate CMBS backed by loans with a weighted average interest rate of 5.53 percent. That’s down from 5.70 percent in the first quarter.
Read more...Interest Rates Down, Leverage Up for Conduit Loans via NREIonline.com
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