I respect the guys at Dwight. That being said, I'm surprised that they're moving down the curve into AMs and AJs stating that the Super Senior trade is done. I'd argue the AM & AJ trade is about over too. AMs are being quoted in spreads now and all the decent ones are 90-above par. AJs seem to be priced pretty far up too. I'd even go so far to argue that the time to buy B - Ds is past, but the run-up is next year (hopefully)!
From Reuters:
Norris said Dwight -- which manages $64 billion in bonds -- is looking at slightly riskier CMBS known as "AM" and "AJ" classes, which have higher yields but less protection from loss. The risk spreads on those could contract another 1 to 1.5 percentage points, he said.
Dwight's portfolios already overweight with CMBS could expand their weightings to as much as 15 percent from about 9 percent, where prospectus allows, he said. Benchmark indexes have about 3 percent CMBS, he said.
I also disagree with their tenant review of Bob's Gun Shop in Texas as not being a desirable tenant - sounds like a perfect tenant for the upcoming revolution!
"There are also some properties that you want to stay away from," he added. "Maybe a mall in Midland, Texas, that's supported by Bob's gun shop."
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In general I do agree with your view on AJs. But there might be some pockets of opportunities in selected AJs from earlier vintages (prior to mid '06).
@ Bob's Gun Shop - lol
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