Increased global market volatility spells trouble for commercial property borrowers

New York /
May.May 24, 2012 09:30 AM

Wall Street’s affinity for commercial mortgage-backed securities is waning, according to Bloomberg News, and that could make it more difficult for developers and investors to obtain financing for their deals.

The bond market was more volatile last week than at any point since January, amid renewed fears stemming from a European debt crisis. That volatility makes it more difficult for CMBS issuers to determine the demand for their securities. As a result, the spread between CMBS yields and Treasury note yields are increasing and indexes tied to lower-rated bonds are falling to their lowest levels in six months.

Banks have arranged about $10 billion in CMBS sales this year, according to Bloomberg, a higher rate than the $2.3 billion offered in the fourth quarter of last year, but below last year’s third-quarter rate, when $8.3 billion worth of notes were sold.

If market volatility continues to scare away CMBS issuers, then that would cut off borrowers from a huge lending source just as $30 billion worth of property debt matures this year. Andrew Solomon, a managing director at Angelo Gordon & Co. said “the volatility is going to be here for years” because “correlation across all asset classes is much higher now than it was pre-Lehman.” [Bloomberg]


Related Articles

arrow_forward_ios
Big Silicon Valley firm grabs 34K sf in Soho
Big Silicon Valley firm grabs 34K sf in Soho
Big Silicon Valley firm grabs 34K sf in Soho
Behind the Vale: Conflict dogs Zelig Weiss and his hip hotel
Behind the Vale: Conflict dogs Zelig Weiss and his hip hotel
Behind the Vale: Conflict dogs Zelig Weiss and his hip hotel
Stephen Ross and Charles Kushner (Getty)
Stephen Ross, Charles Kushner, other titans paid no federal taxes for years
Stephen Ross, Charles Kushner, other titans paid no federal taxes for years
Last call? Cipriani facing possible foreclosure after mortgage default
Last call? Cipriani facing possible foreclosure after mortgage default
Last call? Cipriani facing possible foreclosure after mortgage default
Northpath Investments nabs Milford Plaza for $11M
Northpath Investments nabs Milford Plaza for $11M
Northpath Investments nabs Milford Plaza for $11M
Miki Naftali makes $73M dev play on Upper East Side
Miki Naftali makes $73M dev play on Upper East Side
Miki Naftali makes $73M dev play on Upper East Side
Bloomberg nabs 191K sf expansion with SL Green
Bloomberg nabs 191K sf expansion with SL Green
Bloomberg nabs 191K sf expansion with SL Green
New warehouse leases boosted by inflation, supply chain crisis
New warehouse leases boosted by inflation, supply chain crisis
New warehouse leases boosted by inflation, supply chain crisis
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...