CMBS

Sellers are currently willing to concede discounts of around 5%, while bidders are hoping for about 20% off pre-pandemic prices. That estimated gap, which is likely wider in specific cases, has put a freeze on deals.

Goldman Sachs and Morgan Stanley are backing the first commercial mortgage-backed securities activity in two months, through two deals that exclude hotel or department store retail assets that are most exposed to pandemic-related stresses.

More details have emerged about the damage the coronavirus pandemic is inflicting on the hospitality industry. One servicer alone has received 2,000 workout requests in the past month.

Despite multiple hotel, multifamily and retail tenants are seeking rent relief, borrowers are confident that servicer advances will cover interest payments on Cantor's next CMBS transaction.

The Federal Reserve's $2.3 trillion loan stimulus includes plans for outstanding commercial mortgage-backed securities and newly issued collateralized loan obligations.

Fitch assumes a significant spike in defaults over the next few months, as well as declining new issuance volume during the second and third quarters of 2020, fewer maturing loans and fewer resolutions by special servicers.

ABS participants saw markets freeze and were bracing for worse when federal aid provide a short-term respite. The question now: How much trust can anyone put in the medium-term and beyond?

Mortgage bankers are sounding alarms that the Federal Reserve's emergency purchases of bonds tied to home loans are unintentionally putting their industry at risk by triggering a flood of margin calls on hedges lenders have entered into to protect themselves from losses.

Tom Barrack, who a week ago warned that commercial real estate financing was on the brink of collapse because of the coronavirus pandemic, is now calling for a moratorium on margin calls and intervention by the Federal Reserve to keep values of mortgage debt from plummeting further.

Real estate investor Tom Barrack said predicted a “domino effect” of catastrophic economic consequences if banks and government don’t take prompt action to keep commercial mortgage borrowers from defaulting.