The Federal Reserve’s talk of winding down the bond-buying stimulus is hurting the revival of mortgage bonds not backed by the government, panelists at an investment and real estate finance conference said yesterday.
“As you got into the middle of May, just the talk of the possibility of considering tapering was enough to substantially change market conditions,” Peter Sack, a managing director at Credit Suisse Group AG, said at the Information Management Network’s ABS East conference in Miami. “It wouldn’t be surprising to see very little if any” issuance for the rest of 2013, Sack added.
Lenders are finding it costlier to sell securities as relative yields on the debt climb, leading to a slump in sales. About $12.5 billion in deals tied to new loans have been sold this year, Bloomberg News reported, up from $3.5 billion in all of 2012. But sales projections for 2013 at the end of the first quarter were $20 billion, Sack said.
In September, Fed chairman Ben Bernanke decided to hold off on scaling back the stimulus, a surprise decision that was seen as a temporary tonic for the real estate industry, as The Real Deal reported. [Bloomberg News] – Hiten Samtani