Wednesday, February 9, 2011

New Issue Deals Shady?

Elaine Misonzhnik ponders:

That trend has apparently taken hold of the CMBS market so quickly that one S&P insider has referred to some of the stuff that’s been going into the new pools as outright “crap,” according to a Bloomberg report.

David Post was quoted at ASF this week Bloomberg saying,
“There’s some crap getting done,” David Jacob, an executive managing director at credit-rating company S&P, said today during a panel discussion at the American Securitization Forum trade group’s annual meeting in Orlando, Florida. “It’s surprising to me this early in the cycle that some of that could be happening.”


James said...

what a bunch of fuddy duddies...

Asset quality might be bad, but if you look at the 94/95/96 vintage deals they weren't exactly Taj Mahals either.

The key thing is to look at the Debt Yields on these new issues. They're still in the high 10%/low 11% range (granted, depends on what the UCF is).

I fully expect the deals to go to 9% debt yields before long.

Besides, who cares what the RA's think? The B Buyers have always been the best gate keepers anyway

crabsofsteel said...

David Jacob is actully right. Debt yields don't matter if your top tenant is a soon-to-close Borders or Pathmark or if your borrower is a non-traded REIT playing with retail money.