In April, CMBS issuances worth $5.5 billion hit the market. Observers wondered if bond buyers had enough appetite to hoover up that demand. But it turned out there was no need for concern. Investors devoured the bonds with spreads narrowing from one issuance to the next.
That episode sent a strong message to conduit lenders: the secondary market is in place. Bond buyers are willing to buy CMBS securities. Yields are attractive compared with alternatives. So it’s time to ratchet up the securitization machine.
Through the end of April, there had already been more than $30 billion in CMBS issuances in 2013, according to industry publication Commercial Mortgage Alert. When it’s all said and done, observers think the industry will originate between $90 billion and $100 billion this year—double last year’s volume.
Read more...Here We Go Again | First Word
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