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.”

2 comments:

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.