Commercial Market Still Confusing, Volatile

July 11, 2011

How AAA-rated commercial mortgage-backed securities (CMBS) are trading has emerged as a leading indicator for where the commercial mortgage market is headed.

In recent offerings, the securities traded about 0.40 percent to 0.45 percent higher than earlier this year, only to have pricing drop back down a week later. This, in turn, has taken the air out of a CMBS rebound that was bolstering Wall Street lenders' efforts to compete directly with other sources of debt.

Until a full recovery takes hold, more volatility is almost certain because banks are not expected back as investors in CMBS for a while.

Source: "Commercial Mortgages: Market Is Still Confusing and Volatile," Richmond (Va.) Times-Dispatch (July 11, 2011)

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