CMBS Spreads Widen
June 4, 2014
Commercial MBS prices reversed direction last week, as dealers were forced to accept wider spreads than expected on super-senior and most-junior classes of investment-grade bonds in two multi-borrower offerings.
The long-term, super-senior paper in both conduit issues went out the door last Wednesday with spreads 2-3 bp wider than guidance. They were initially shopped with price talk in line with the year-to-date low of 83 bp over swaps set by the previous conduit issue, which priced May 7.
Traders and investors said the slip in pricing was at least partly due a recent rally among U.S. Treasurys, which prompted CMBS investors focusing on absolute yields to demand wider spreads.