News

CREFC Capital Markets Update Week of 6/5

June 5, 2023

  • Private-Label CMBS and CRE CLOs. It was a busy two-week period for the private-label market. One SASB and one CRE CLO priced last week with three transactions, consisting of two SASBs and one conduit, pricing in the week leading up to Memorial Day weekend. The forward pipeline is robust: eight conduits totaling $7.3 billion, three SASBs totaling ~$2 billion, and four CRE CLOs totaling $2.1 billion.

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  • Year-to-date, private-label CMBS and CRE CLO issuance stood at $15.1 billion, 80% behind last year’s tally at this time of $75.5 billion. Benchmark CMBS spreads in the secondary market were unchanged to slightly tighter last week. LCF AAA spreads were unchanged at 150, as were BBB- spreads at 925. AA and A spreads were tighter by 20 and 10 bps to 270 and 430, respectively. AAA SASB spreads tightened 3 – 5 bps to a range of 170 – 260.
  • The 10-year Treasury yield decreased 11 bps last week to 3.69%. The yield was down to 3.60% earlier in the week before surging on Friday following the release of the May jobs report. The report showed payrolls increased by 339,000 last month, well above the median estimate of 195,000. At the same time, however, the unemployment rate increased from 3.4% to 3.7%, with 440,000 more people out of a job in May, the largest monthly rise since the onset of the pandemic. The mixed nature of the report may support Fed Chair Powell’s approach to pausing interest rate hikes when the FOMC meets again on June 13-14. Futures markets are now pricing in a 25% probability that the Fed will increase rates by 25 bps at its June meeting, whereas only a week prior, the market was pricing in a 64% probability of an increase. CME 1M Term SOFR hit 5.17% during the week, its highest level of the year, before ending last week at 5.14%.
  •  Agency CMBS. Agency issuance was light last week, with $280 million of new transactions. Agency issuance for 2023 now stands at $44.9 billion, 43% lower than the $78.6 billion for the same period last year.

Contact 

Raj Aidasani
Senior Director, Research
646.884.7566
raidasani@crefc.org
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The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2023 CRE Finance Council. All rights reserved.

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