CREFC Capital Markets Update: Week of 7/25

July 25, 2022

Another Quiet Issuance Week in the Private-Label Market

Private-Label CMBS and CRE CLOs. Only one private-label CMBS transaction priced last week, a $581 million SASB transaction (GSMS 2022-SHIP) secured by a portfolio of industrial assets. The triple-A bonds priced at S+200 bps and Baa3 bonds at +370 bps. This week one CRE CLO and another SASB transaction are being pre-marketed.

Slower issuance is expected to continue amidst continued macro uncertainty and the challenges of originating new loans at higher coupons and cap rates.

  • As of July 22, private-label CMBS and CRE CLO issuance stood at $73.7 billion, exactly the same point as the same period in 2021. Lower issuance in recent months has significantly narrowed the overall year-over-year margin following a solid start to the year. At the end of Q1 2022, total issuance was 70% ahead of the same period in 2021.

  • According to BofA Global Research, there are 20 private-label transactions totaling ~$12 billion in the current pipeline consisting of four conduit CMBS, six SASB CMBS, and 10 CRE CLO transactions. However, it is expected that pricing will be delayed and timelines extended as issuers wait for less volatile markets and more assured execution.

  • CMBS Benchmark spreads mostly tightened last week, supported by a paucity of economic data and a general risk-on tone in the market.
    • Spreads on 10-year conduit CMBS super-senior AAA bonds tightened 6 basis points (bps), in line with AA corporate bond spreads, while AA – A spreads tightened by 10 bps to 210 – 290, respectively.
    • BBB- spreads were unchanged at 585 bps.

  • Agency CMBS. Issuance last week totaled $1.9 billion, consisting of two Freddie K transactions.
    • Total agency issuance reached $96.4 billion for the year-to-date period ended July 22, which is down 8% from last year's point ($105.2 billion).
    • Guaranteed agency spreads were unchanged on the week.

Contact

Raj Aidasani
Senior Director, Research
646.884.7566
raidasani@crefc.org
Another Quiet Issuance Week in the Private-Label Market
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. © 2022 CRE Finance Council. All rights reserved.

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