Though first half domestic issuance was down 15% to 16% from the same period in 2001, the July calendar brings hope that the second half will make up some of the difference.
In the pipeline are five conduits for $6 billion and four to five large loan floating-rate transactions totaling $4 billion to $5 billion, all scheduled for the next four weeks, according to Banc of America Securities. While pricing all of those issues seems like a lofty goal, on the conduit side at least three deals are expected to print by the end of July.
The anticipated robust issuance for the next two quarters now has dealers re-examining and reconfirming their total-year estimates. Roger Lehman is sticking with Merrill Lynch's original call for $63 billion to $68 billion, due to the slow pace in the first half, and Salomon Smith Barney tightened up their projections to $70 billion to $80 billion from original $68 billion to $82 billion target range.
Looking ahead, Credit Suisse First Boston is currently premarketing a $900 million conduit - CSFB 2002-CP3 - via CSFB, PNC Bank, and Morgan Stanley. The issue is expected to attract some interest from the GSEs as there is a 30% multifamily asset exposure. Behind that JPMorgan is putting together a $1 billion-plus conduit, with collateral provided by LaSalle, Wachovia, and Artesia. The rest of the conduit calendar has deals from GE Capital, Deutsche Bank, BofA and Salomon.
Lehman Aggregate Index led by CMBS
According to Lehman Brothers, the CMBS sector was the best performing sector of the Aggregate Index in the first half of 2002. Through June, the CMBS index gained 633 basis points in total returns. The gain was 166 basis points in June as CMBS led Treasuries by seven basis points, while short duration triple-As led RMBS by 21 basis points and long durations led RMBS by 24 basis points. Due to the credit woes in corporates, triple-B CMBS led similar corporate credits by 237 basis points and double-B and B classes beat corporates by 795 and 880 basis points, respectively.