Issuance of commercial mortgage bonds has gotten off to a slow start this year, and the pace is unlikely to pick up soon, according to panelists at a securitization industry conference,

Just $7.8 billion of private label CMBS priced in February, bringing this year’s total to $10.6 billion, down 34.5% from the same period of 2015, according to Kroll Bond Rating Agency.

Lisa Pendergast, a managing director at Jefferies and a panelist at ABS Vegas, sponsored by IMN and the Structured Agency Finance Group, said issuance of commercial mortgage bonds will likely remain slow through May, June, and even July because originations of loans used has collateral has slowed due to market volatility. And by summer, CMBS market participants grappling with rules taking effect at the end of the year requiring sponsors to retain a 5% economic interest in their deals.

Jefferies is calling for less than $90 billion of new issuance this year, Pendergast said, down from over $100 billion in 2015.  

KBRA has an even more pessimistic view. On Tuesday, the rating agency slashed its forecast for full-year issuance by 40%, to $60 billion, saying that the CMBS market “has been turned upside down by continued spread widening.”

Stefanos Arethas, a director at Credit Suisse, sees an upside to risk retention rules: they will create better align the interests of loan sellers and banks that aggregate loans.

There’s been relatively little discussion of exactly how sponsors will comply with the rules and little guidance from regulators. Arethas said that the choice of structures will, obviously, be driven by what investors are willing to pay, and he doubts that they are willing to pay up for a more sound structure. “Ask a buy-side firm, ‘How much would you pay up for more liquidity?’ and they would say, ‘nothing’,” he said.

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