News Archive

News

Semiconductor Legislation Heads to President’s Desk

August 1, 2021

Congress last week approved bipartisan legislation, called the CHIPS and Science Act, designed to decrease U.S. reliance on Chinese-manufactured semiconductors, support science and technology research, address supply chain and national security concerns, and keep American industries competitive with foreign firms. The $280 billion “Creating Helpful Incentives to Produce Semiconductors” or CHIPS legislation will provide “semiconductor companies $52.7 billion to encourage them to develop and research semiconductors and chips in the U.S., reports The Wall Street Journal. This includes:

  • $39 billion in financial assistance to build, expand, or modernize domestic facilities and equipment for semiconductor fabrication, assembly, testing, advanced packaging, or research and development.

  • $11 billion for Department of Commerce research and development.

  • $1.5 billion for ‘leap-ahead’ technologies in the U.S. mobile broadband market.

The bill also creates a 25% investment tax credit for companies that invest in semiconductor manufacturing.

Republicans had threatened to block the CHIPS bill if Democrats did not agree to abandon their bigger budget reconciliation plans. On July 27, the Senate voted 64-33 (including 17 Republicans) to pass the CHIPS legislation. A few hours later (and the night before the House vote), Senate Democrats announced a Schumer-Manchin reconciliation agreement. The next morning, the House voted 243-187 (including 24 Republicans), after House Republican Leader Kevin McCarthy opted to whip against the CHIPS manufacturing bill that Senate Republican Leader Mitch McConnell had supported one day earlier, opening a curious rift among Republicans in Congress.

The legislation underwent at least five renaming and countless major revisions before it passed.

Contact 

Justin Ailes
Managing Director, Government Relations
202.448.0853
jailes@crefc.org


The bill also creates a 25% investment tax credit for companies that invest in semiconductor manufacturing.
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. © 2021 CRE Finance Council. All rights reserved.
Semiconductor Legislation Heads to President’s Desk
August 01, 2022
Congress last week approved bipartisan legislation, called the CHIPS and Science Act, designed to decrease U.S. reliance on Chinese-manufactured semiconductors, support science and technology research, address supply chain and national security conce

News

Federal Reserve Releases Proposal to Implement Federal LIBOR Legislation

August 1, 2022

On July 19, the Federal Reserve Board (the “Board”) issued a press release inviting comment on a proposal related to the Adjustable Interest Rate (LIBOR) Act, which Congress passed on March 15, 2022.

This important implementation proposal:

  • Addresses LIBOR contracts governed by U.S. law that remain outstanding after the planned cessation of LIBOR on June 30, 2023, and

  • Directs the Board to publish the regulations (the “proposal” or the “proposed rule”) required for its successful implementation.

What Is the Fed Asking?
The Fed seeks input on a proposal that provides default rules for certain contracts that use the LIBOR reference rate. In effect, the proposed rule would establish benchmark replacements for contracts that reference LIBOR and that do not have terms that provide for the use of a clearly defined and practicable replacement rate following the first London banking day after June 30, 2023 (the “LIBOR replacement date”).

Comments on the Board’s proposal are due August 29, 2022. However, it should be noted that the law directs the Board to promulgate regulations not later than 180 days after the date of enactment (or September 11, 2022). As a result, the final rule's effective date should be well before the LIBOR replacement date.

Legacy Contracts and the LIBOR Act
On the LIBOR replacement date, the proposal will replace references to LIBOR in “covered contracts” with a Board-selected rate which, as required by the law, will be based on the Secured Overnight Financing Rate (SOFR). The proposal defines “covered contract” to mean a LIBOR contract that has one of the following characteristics as of the LIBOR replacement date:

  1. Contains no fallback provisions;

  2. Has fallback provisions that identify neither a specific benchmark replacement nor a determining person; or

  3. Identifies a determining person, but the determining person fails to select a benchmark replacement.

The proposal further clarifies that a covered contract would not include any LIBOR contract that the parties have agreed in writing shall not be subject to the LIBOR Act.

Board-Selected Replacement Rates
The Board-selected benchmark replacements for the various types of covered contracts are identified in the table below.

Critically, the law also authorized the Board to require any “additional technical, administrative, or operational changes, alterations, or modifications to LIBOR contracts” (i.e., “conforming changes”) to aid in the implementation of the Board-selected benchmark replacement rates. However, the proposal states that the Board “does not believe any additional conforming changes would be needed for successful implementation of the Board-selected benchmark replacements” but that it reserves the authority, in its discretion, to “require any additional conforming changes, by regulation or order.”

This Is Important; CREFC Wants to Hear from You…
The Board indicates that, if finalized, the proposed rule will become effective on “the first day of the next calendar quarter that begins 30 days after publication of the final rule in the Federal Register.” The Board invites comments on all aspects of the proposed rule and, in addition, specific questions, including:

  • What, if any, alternative SOFR-based benchmark replacements should the Board consider for covered GSE contracts instead of 30-day Average SOFR, such as SOFR term rates?

  • Should the Board identify a single Board-selected benchmark replacement for all covered contracts?

  • What, if any, additional clarifications should the Board consider regarding the Board-selected benchmark replacements?

  • What, if any, benchmark replacement conforming changes should the Board consider?

CREFC welcomes your feedback on the proposal, and for any questions or comments, please contact Raj Aidasani or Lisa Pendergast. CREFC and other trade associations will respond to the Fed’s request for comment based on member feedback. CREFC plans to host a conference call in the coming days to discuss. The due date for comments is August 29, 2022.


Contact

Raj Aidasani
Senior Director, Research
646.884.7566
raidasani@crefc.org

On July 19, the Federal Reserve Board (the “Board”) issued a press release inviting comment on a proposal related to the Adjustable Interest Rate (LIBOR) Act, which Congress passed on March 15, 2022.
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.
Federal Reserve Releases Proposal to Implement Federal LIBOR Legislation
August 01, 2022
On July 19, the Federal Reserve Board (the “Board”) issued a press release inviting comment on a proposal related to the Adjustable Interest Rate (LIBOR) Act, which Congress passed on March 15, 2022.

News

Guidance on COVID Relief Money for Affordable Housing

August 1, 2022

On July 27, Treasury published guidance on expanding the use of American Recue Plan funds for affordable housing projects. The guidance is specific to the $350 billion of state and local relief funds (SLFRF) passed as part of Biden’s COVID aid package in March 2021. State and local governments have fairly broad discretion to direct those federal funds to the following categories:

  • Replacing lost public sector revenue

  • Respond to the public health and negative economic impacts of the pandemic;

  • Provide premium pay for essential works; and

  • Invest in water, sewer, and broadband infrastructure.

Treasury issued rules in January 2022 to increase the flexibility on the $350 billion, including housing, and this guidance expands on the affordable housing focus. According to Treasury, $12.9 billion of these funds have already gone toward housing and lowering housing costs, and $4.2 billion of that total has been allocated for affordable housing development and preservation.

More Flexibility and Eligibility
The guidance aims to:

  • Increase Flexibility to Use SLFRF to Fund Long-Term Affordable Housing Loans: The guidance clarifies that state and local governments can use SLFRF funds to fully finance affordable housing loans, including principal. Treasury expects this change will promote funding for affordable projects, including Low Income Housing Tax Credits (LIHTC).

  • Expand Presumptively Eligible Uses. The January rule allowed funds to be presumptively eligible for two major HUD programs (National Housing Trust Fund and the Home Investment Partnership Program), but the guidance expands the eligibility to presumptively allow funds “to finance the development, repair, or operation any affordable rental housing unit that provides long-term affordability of 20 years or more to households at or below 65% of the local area median income. Treasury released a detailed “Affordable Housing How-To Guide” that outlines the criteria for various affordability investments.

Contact 

David McCarthy
Managing Director, Head of Policy
202.448.0855
dmccarthy@crefc.org
Treasury issued rules in January 2022 to increase the flexibility on the $350 billion, including housing, and this guidance expands on the affordable housing focus.
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.
Guidance on COVID Relief Money for Affordable Housing
August 01, 2022
On July 27, Treasury published guidance on expanding the use of American Recue Plan funds for affordable housing projects. The guidance is specific to the $350 billion of state and local relief funds (SLFRF) passed as part of Biden’s COVID aid packag

News

Budget Reconciliation Agreement on Inflation Reduction Act

August 1, 2022

Last Wednesday evening, Senator Joe Manchin (D-WV) announced he reached an agreement with Senate Majority Leader Chuck Schumer (D-NY) on a slimmed down tax, health care, climate and energy spending bill. A one page summary says the bill would “enact historic deficit reduction to fight inflation” and lower healthcare and energy costs. The new Democrat-only budget reconciliation bill, called the Inflation Reduction Act, includes $433 billion in spending – $369 billion towards climate and energy – coupled with $739 billion in new revenue, with $306 billion in deficit reduction.

As per Politico, “Overnight [Manchin] has become the author of the most significant carbon-reducing legislation in history and the savior of Biden’s legislative agenda. Adding that “after once being described by Bernie Sanders (I-VT) as “sabotaging” President Biden’s agenda and single-handed roadblock to their policy ambitions. Axios describes Manchin transformed, “from fickle obstructionist to master tactician overnight.” Yet, Politico notes: “Politically, pivoting from saboteur to savior is awful for Manchin back in West Virginia, where Biden’s approval rating is nineteen percent.”

Energy Efficient Buildings
For commercial real estate, the bill makes key changes to Section 179D, which incentivizes energy efficient retrofits for commercial buildings. The 179D deduction would be increased from the current $1.80 per square foot to a sliding scale of $2.50 to $5.00 per square foot, depending on compliance with heightened wage and labor standards, according to the U.S. Green Building Council.

Other tax incentives for energy efficiency, renewable energy, storage, electric vehicles, and other clean energy technologies, and additional funding for green affordable housing included in the bill could reduce carbon emissions by around 40% by 2030. A summary of the bill’s energy security and climate provisions provides additional detail.

Tax Increases
To pay for the spending and deficit reduction, the bill would raise:

Carried Interest
Carried interest, taxed at a capital gains rate of 20%, is the percentage of an investment’s gains that a private equity partner or hedge fund manager takes as compensation, which would otherwise be taxed at the ordinary income tax rate of 37% for top earners.

  • The bill seeks to by extend the capital gains holding period requirement for carried interest from three to five years.

  • Beneficiaries of carried interest say the change, “could potentially hurt small businesses and big investors, such as endowments, foundations and pension funds.”

  • However, real estate is exempted from the five-year hold and would instead maintain a three-year hold period, in what has been described as, “Not the end of the world, but not painless for some.”

CREFC has been coordinating with the Real Estate Roundtable and other real estate trade associations on the impacts of the proposed legislation on the industry. See stories by the New York Times and Wall Street Journal for more detail.

Permitting Reform
Notably, the agreement calls for comprehensive permitting reform legislation to be passed this fall, to unlock domestic energy and transmission projects, lower costs for consumers, and help meet long-term emissions goals.

Passage Not a Certainty – Senator Sinema Is the ‘X’ Factor
Whether the legislation will be signed into law before a September 30 procedural deadline is dependent on three variables:

  • How Senator Kyrsten Sinema reacts. The centrist Democrat, who was influential in earlier budget negotiations, reportedly learned of the agreement via Twitter and was not consulted or briefed on the secret talks between Manchin and Schumer.

  • How a handful of Democrats from high-tax states like New York, New Jersey, and California will react. A number of these lawmakers have insisted that any reconciliation vote must lift the limit on deductions for state and local taxes (SALT). Democrats control the House by just a slim three-vote margin.

  • How many Senators will be unable to vote in August, due to COVID (Sen. Durbin) or injury (Sen. Leahy). Speaker Nancy Pelosi announced the House will return to vote on the legislation in August.

Further reading

  • How Manchin struck a miracle of a deal with Schumer, Pelosi and Biden – The Hill

  • Surprise Deal Would Be Most Ambitious Climate Action Undertaken by U.S. – New York Times

  • ‘Inflation Reduction Act’ Has Little Inflation Help, UPenn Study Says – Bloomberg

Contact 

Justin Ailes
Managing Director, Government Relations
202.448.0853
jailes@crefc.org

For commercial real estate, the bill makes key changes to Section 179D, which incentivizes energy efficient retrofits for commercial buildings. The 179D deduction would be increased from the current $1.80 per square foot to a sliding scale of $2.50 to $5.00 per square foot, depending on compliance with heightened wage and labor standards, according to the U.S. Green Building Council.

 
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.
Budget Reconciliation Agreement on Inflation Reduction Act
August 01, 2022
Last Wednesday evening, Senator Joe Manchin (D-WV) announced he reached an agreement with Senate Majority Leader Chuck Schumer (D-NY) on a slimmed down tax, health care, climate and energy spending bill. A one page summary says the bill would “enact

News

Financial Stability Oversight Council (FSOC) Releases Factsheet on Climate-Related Financial Risk Efforts

August 1, 2022

On July 28, the Financial Stability Oversight Council (FSOC) received an update on the progress made to identify and address climate-related financial risk. In its October 2021 Report on Climate Related Financial Risk, the FSOC identified climate change as an emerging threat to financial stability and issued over 30 related recommendations to financial regulators. The Factsheet released today describes the progress made to-date, some of which has been described in previous CREFC Policy and Capital Markets Briefings.

Enhancing interagency coordination to support climate-related financial risk monitoring
The FSOC formed a new staff-level committee, the Climate-related Financial Risk Committee (CFRC), comprised of all 15 FSOC members. The CFRC first met in February 2022 and aims to facilitate interagency information sharing, coordination, and capacity building.

Progress on FSOC climate report recommendations by members
In addition to building internal capacity, including staffing and training, FSOC members are working to:

Enhance Public Climate-Related Disclosures

  • In May 2022, the Securities and Exchange Commission (SEC) issued a proposal on climate disclosures. Please see here for CREFC’s response. The SEC also proposed amendments to rules and reporting forms to promote consistent, comparable, and reliable information for investors concerning funds’ and advisers’ incorporation of ESG factors;

  • On April 6, 2022, the Executive Committee of the National Association of Insurance Commissioners approved the updated Climate Risk Disclosure Survey for insurance companies to align with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures framework; and

  • The Federal Insurance Office (FIO) expects to publish, by the end of 2022, an analysis of existing climate-related disclosure requirements for insurers on climate-related issues or gaps in the supervision and regulation of insurers.

Assess and Mitigate Climate-Related Risks That Could Threaten U.S. Financial Stability
The Factsheet noted the need for strong analytical tools to assess climate-related financial risks and highlighted the below developments:

  • The Federal Reserve is developing a program of climate-related scenario analysis to evaluate the potential economic and financial risks posed by different climate outcomes;

  • In June 2022, the Commodity Futures Trading Commission (CFTC) published a request for information on climate-related financial risk related to derivatives markets, underlying commodities markets, and market participants;

  • The Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) proposed principles on climate-related financial risk management for large banks, published in December 2021 and March 2022, respectively, for each agency. The principles include draft guidance on the development and implementation of scenario analysis by supervised firms; and

  • The Federal Housing Finance Agency (FHFA) announced that the 2022 Conservatorship Scorecard will hold Fannie Mae and Freddie Mac accountable for ensuring resiliency to climate risks.

Fill Climate-Related Data and Methodological Gaps

  • The Office of Financial Research announced the launch of its Climate Data and Analytics Hub pilot program to help financial regulators assess potential risks to financial stability stemming from climate change.

CREFC, via its Sustainability Initiative, continues to monitor both legislative and regulatory climate-related developments. Please contact Sairah Burki with any questions.

Contact

Sairah Burki
Managing Director, Regulatory Affairs
703.201.4294
sburki@crefc.org
The FSOC formed a new staff-level committee, the Climate-related Financial Risk Committee (CFRC), comprised of all 15 FSOC members. The CFRC first met in February 2022 and aims to facilitate interagency information sharing, coordination, and capacity building.
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. © 2021 CRE Finance Council. All rights reserved.
Financial Stability Oversight Council (FSOC) Releases Factsheet on Climate-Related Financial Risk
August 01, 2022
On July 28, the Financial Stability Oversight Council (FSOC) received an update on the progress made to identify and address climate-related financial risk. In its October 2021 Report on Climate Related Financial Risk, the FSOC identified climate cha

News

EPA Decision Shifts Focus to States and Cities for Climate Risk Mitigation

July 26, 2022

Prospects for significant climate regulation at the Federal level have dimmed due to a recent Supreme Court case that ruled the Environmental Protection Agency (EPA) does not have the authority to regulate carbon emissions from power plants.. The Supreme Court ruling pointed to the “major questions doctrine” for the first time, setting precedent that major regulatory changes must first be expressly authorized by Congress. Any further regulatory moves to address climate risk, including implementation of the Securities and Exchange Commission’s (SEC) climate disclosure proposal, will likely be litigated at every turn.

This development exerts more pressure on states and cities to continue to move forward with climate mitigation and resiliency efforts as they did during the Trump administration. One key focus area is greenhouse gas emissions from building. While the EPA states that buildings are responsible for approximately 6% of total greenhouse gas emissions in the U.S., buildings are a much more significant source of emissions in large cities. According to a 2016 mayoral report cited by Law360, buildings accounted for more than 70% emissions in New York City. As a result, cities and states began passing significant building emissions cap laws during the Trump administration; for example:

  • Washington, D.C.: 2018 law aimed at reducing emissions by 50% by 2032;

  • New York City: 2019 Local Law 97 mandating a 40% reduction in greenhouse gas emissions for buildings over 25,000 square feet by 2030, relative to 2005 levels. Other major cities, including Los Angeles and Denver, followed suit with similar laws; and

  • Berkeley, CA: 2019 law banning new natural gas hookups in buildings. The state of New Jersey and cities like San FranciscoSeattleDenverNew York, and likely Washington, D.C. have also introduced a ban on new natural gas hookups.

Local climate laws, however, are not completely immune to difficulties that also beset legislation and regulation at the Federal level:

  • Pushback from Certain States. States can interfere in local mandates; for example, 20 states with Republican-controlled legislatures, including Texas, Louisiana, Florida, and Wyoming, have passed preemption laws that prohibit cities from banning natural gas hookups. Amy Turner, a senior fellow at the Sabin Center for Climate Change Law at Columbia Law School, told Law360 that the specifics of the state and city laws and approaches vary widely across the country. She says, “That variability explains, in part, the big differences being seen between heartland states that are limiting local control and more liberal or coastal states moving forward with strict building decarbonization plans”;

  • Cost Allocation. Lack of clarity in terms of cost burden; i.e., how will costs be allocated between renters and property owners;

  • Supply Chain and Labor Constraints. Current supply chain stresses and labor shortages are complicating owners’ efforts to make their buildings more energy efficient; and

  • Denial. Skepticism that penalties from lack of compliance will actually be imposed, especially given a lawsuit filed in New York state court by building owners against Local Law 97.

CREFC, via its Sustainability Initiative, continues to follow significant climate regulatory and legislative developments at the Federal, state, and local levels. If you would like to join this Initiative, please contact Sairah Burki.

Contact

Sairah Burki
Managing Director, Regulatory Affairs & Sustainability
703.201.4294
sburki@crefc.org
According to a 2016 mayoral report cited by Law360, buildings accounted for more than 70% emissions in New York City. 
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.
EPA Decision Shifts Focus to States and Cities for Climate Risk Mitigation
July 25, 2022
Prospects for significant climate regulation at the Federal level have dimmed due to a recent Supreme Court case that ruled the Environmental Protection Agency (EPA) does not have the authority to regulate carbon emissions from power plants.. The Sup

News

FHFA Director Testifies on the Hill

July 25, 2022

On July 20, Federal Housing Finance Agency (FHFA) Director Sandra Thompson made her first appearance before the House Financial Services Committee as Director. The hearing entitled “Housing in America: Oversight of the Federal Housing Finance Agency” focused largely on the GSEs role in the single family housing market in addition to the high cost of housing. Thompson’s expertise as a seasoned financial regulator came through in her detailed responses to technical questions, and she won bipartisan praise on a number of her initiatives.

Highlights
While single family home ownership heavily dominated questions, several topics of interest to CREFC members were raised:

  • Capital and Credit Risk Transfers: Several Republicans expressed concern that the GSEs were undercapitalized, but Rep. Blaine Luetkemeyer (R-MO) and Rep. Andy Barr (R-KY) praised some of the revisions in the Enterprise Capital Rule that allowed additional relief for Credit Risk Transfers. Thompson noted the GSEs currently have around $80 billion in capital and the rule targets around $300 billion, depending on their exposure.

  • Conservatorship and Reform: Several members pressed Thompson on whether she was working to end the 14-year conservatorship. Thompson was careful not to commit to an exit timeline or goal and emphasized that Congress must take the lead in any reform efforts. But Thompson also highlighted the progress FHFA and the GSEs are making on key metrics that prepare them for an exit, such as capital, risk transfer, and credit risk.

  • Institutional Investor Purchases: Rep. Al Green (D-TX) briefly made a point about institutional purchases of single-family homes, which he described as “predatory”. Thompson noted FHFA prohibited the GSEs from purchasing institutional SFR loans in 2018.

  • Climate Change: Rep. Al Lawson (D-FL) asked about FHFA’s efforts on the effects of climate change on homeowners. Thompson outlined the increasing risks of wildfires and storms from a resiliency standpoint and emphasized FHFA is working to have programs in place for borrowers affected by those disasters.

  • Multifamily Caps: While multifamily was largely unaddressed, Rep. Brad Sherman (D-CA) urged Thompson, before his time ran out, to raise the GSE multifamily caps.

Contact 

David McCarthy
Managing Director, Head of Policy
202.448.0855
dmccarthy@crefc.org
Thompson’s expertise as a seasoned financial regulator came through in her detailed responses to technical questions, and she won bipartisan praise on a number of her initiatives.
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.
FHFA Director Testifies on the Hill
July 25, 2022
On July 20, Federal Housing Finance Agency (FHFA) Director Sandra Thompson made her first appearance before the House Financial Services Committee as Director. The hearing entitled “Housing in America: Oversight of the Federal Housing Finance Agency”

News

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.
CREFC Capital Markets Update: Week of 7/25
July 25, 2022
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

News

Maryland Primary Results

July 25, 2022

Last week, Maryland hosted the only primary election this month to select candidates to run in November’s general election. Below are the results of a few notable races:

Gubernatorial Primary
This fall’s gubernatorial election will be the biggest contest in Maryland as both political parties compete to succeed popular but term-limited Governor Larry Hogan (R).

State legislator and Trump-endorsed candidate Dan Cox (R) won the Republican gubernatorial primary with 56.2% of the vote. His primary opponent, former Maryland Secretary of Commerce Kelly Schulz (R), finished with 40.2%.

Results are still incomplete among Democrats, but Wes Moore (D) is leading the primary with 36.4% of the vote, followed by former Democratic National Committee Chair Tom Perez (D), with 27.6%, and Maryland Comptroller Peter Franchot (D) with 19.5%.

Senate Primary
Incumbent Senator Chris Van Hollen (D-MD) comfortably defeated a primary challenge with 78% of the vote. His opponent Michelle Smith (D), finished with 22% of the vote. Chris Chaffee (R) won the Republican Senate primary with just 22% of the vote. In November, Senator Van Hollen will be the heavy favorite against Chaffee. To view the full results, click here.


Contact

Chelsea A. Neil
Manager, Political &
Government Relations
202.448.0857
CNeil@crefc.org

Last week, Maryland hosted the only primary election this month to select candidates to run in November’s general election.
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.
Maryland Primary Results
July 25, 2022
Last week, Maryland hosted the only primary election this month to select candidates to run in November’s general election. Below are the results of a few notable races...

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