Daily market intelligence on mortgages, equity raising, investment sales, and CMBS.

Tuesday, 01 October 2019

Heavy Week of CMBS Issuance Brings 3Q Volume to $18.2Bln

A flurry of six private-label CMBS deals totaling $4.4 billion priced during the third quarter's last seven days, bringing issuance for the three-month period to $18.2 billion. That's 3.3 percent more than what had priced during the same period a year ago and brings issuance for the year so far to $57.5 billion, just slightly behind last year's issuance pace.

Commercial Real Estate Direct Staff Report

A flurry of six private-label CMBS deals totaling $4.4 billion priced during the third quarter's last seven days, bringing issuance for the three-month period to $18.2 billion.

That's 3.3 percent more than what had priced during the same period a year ago and brings issuance for the year so far to $57.5 billion, just slightly behind last year's issuance pace.

The latest flurry of deals has been driven by what continues to be super-low interest rates. With the 10-year Treasury yield hovering in the 1.7 percent range, lenders are able to offer conduit loans with coupons in the high 3-percent to low 4-percent range.

That has pulled borrowers out of the woodwork and led to one of the healthiest Septembers, in terms of issuance, over the past 10 years.

The weighted average coupon for the 11 conduit deals that priced since early August, when the 10-year Treasury breached the 2 percent yield mark, has been 4.025 percent. While the loans in those deals generally were written when Treasurys were yielding slightly more, it compares with the 4.133 percent coupon for the 11 previous conduit deals, which priced when Treasurys were yielding between 2 percent and 2.43 percent.

Continued low Treasury yields are sure to drive healthy conduit issuance. As such, total volume for the full year should at least match the $76.1 billion issued in 2018.

Domestic Private-Label CMBS Issuance

 

3Q2019

3Q2018

Type

#Deals

Vol $mln

Shr%

#Deals

Vol $mln

Shr%

Conduit

14

13,997.95

76.93

10

8,922.52

50.65

Single-borrower

13

4,197.60

23.07

22

8,562.14

48.60

Other

0

0

 

1

132.30

0.75

 

27

18,195.55

 

33

17,616.96

 

Unlike last year's third quarter, the volume of conduit deals was nearly triple that of single-borrower transactions. That's likely due to profitability. Issuers are well able to sprinkle pieces of large loans into conduit transactions, often improving their credit profiles. And those deals have been quite profitable - some recent transactions have provided their issuers with a profit margin of 5 percent and more.

Single-borrower deals - not so much. Lately some - at least those structured with horizontal or hybrid risk retention - have been only marginally profitable, if at all. That's a clear indication that other lenders, including life insurance companies, continue to aggressively pursue large loans against trophy properties. It's also a sharp turnaround from earlier in the year and last year, when the volume of large single-borrower transactions outpaced that of conduit deals.

Domestic Private-Label CMBS Issuance

 

9Mos2019

9Mos2018

Type

#Deals

Vol $mln

Shr%

#Deals

Vol $mln

Shr%

Conduit

35

31,988.50

55.61

31

28,615.75

49.33

Single-borrower

56

24,974.30

43.42

64

29,097.05

50.16

Other

2

555.70

0.97

2

297.26

0.51

 

93

57,518.50

 

97

58,010.06

 

Meanwhile, Citigroup maintained its lead in a ranking of bookrunners of private-label CMBS. It received credit for 9.3 deals totaling $6.7 billion, or 11.7 percent of the year's issuance so far. Just behind it is Goldman Sachs, with 10.8 deals totaling $6.6 billion, or 11.5 percent of issuance. In third is Morgan Stanley, which leapfrogged JPMorgan Securities. It received credit for 9.8 deals totaling $6.5 billion, for an 11.3 percent share of the market.

Top Bookrunners

Domestic, Private-Label CMBS

 

9Mos2019

9Mos2018

Investment Bank

#Deals

Bal $mln

MktShr%

#Deals

Bal $mln

MktShr%

Citigroup

9.310

6,686.25

11.66

6.89

5,114.51

8.82

Goldman Sachs

10.810

6,595.43

11.50

11.88

6,517.39

11.23

Morgan Stanley

9.825

6,485.25

11.31

8.16

5,466.19

9.42

Wells Fargo Securities

8.059

6,336.42

11.05

10.3

5,850.83

10.09

JPMorgan Securities

12.795

6,299.81

10.95

16.05

9,725.13

16.76

Deutsche Bank

6.889

5,693.28

9.93

11.35

7,938.73

13.69

BofA Merrill Lynch

8.568

5,617.16

9.80

4.38

3,137.32

5.41

Credit Suisse

4.469

4,114.74

7.18

3.71

2,423.20

4.18

Barclays Capital

4.653

2,921.04

5.09

4.49

2,954.67

5.09

UBS Securities

2.403

1,800.42

3.14

5.09

3,647.86

6.29

Cantor Fitzgerald

4.004

1,791.21

3.12

1.97

942.73

1.63

Societe Generale

4.096

1,517.62

2.65

1.62

1,286.44

2.22

Natixis

3.992

980.20

1.71

10.11

2,872.57

4.95

KeyBank

1.291

523.17

0.91

0.00

0.00

0.00

Performance Trust

1.000

156.70

0.27

1.00

132.30

0.23

 

93

57,518.50

 

97

58,010.06

 

Banks that focused on their conduit issuance in recent months have moved up the ranking, while those focused on single-borrower issuance did the opposite.

Commercial Real Estate Direct divvies up bookrunner credit proportionally among all of a deal's bookrunners, based on what's stipulated in offering materials.

Comments? E-mail Orest Mandzy, or call him at (267) 327-4281.





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Data Digest

 

CMBS DELINQUENCY VOLUME

dqdataFP1

 

CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2017
Investment Bank #Deals Vol$mln MktShr%
Goldman Sachs 17.59 11,819.34 13.68
JPMorgan Securities 14.52 10,968.11 12.70
Citigroup 12.04 10,012.71 11.59
Wells Fargo Securities 14.02 9,936.06 11.50
Deutsche Bank 12.55 9,879.74 11.44

 

RCA CPPI

 

cppichart FP

 

 

CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2017
Lender #Loans Vol$mln MktShr%
Goldman Sachs 146.89 11,719.34 13.63
JPMorgan Chase Bank 117.68 10,114.14 11.76
Deutsche Bank 198.48 9,689.97 11.27
Morgan Stanley 166.18 8,539.78 9.93
Citigroup 199.05 8,088.24 9.41

 

 

 

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