Already rich CMBS market still fundamentally strong

Despite some of the tightest levels in recent memory, CMBS spreads continue to richen, as supply has been notably slower than last year's pace, primarily because of the terrorism insurance issue. A multitude of factors, however, is contributing to the success of the CMBS sector so far this year.

Crossover buying from the corporate sector is sustained with each passing headline about another failed oversight of accounting practices. Those two factors in particular have investors and analysts alike comfortable with the notion that spreads may indeed ratchet even tighter before any concerns of a reversal begin to surface.