The lending market cycle invariably turns to favor borrowers, but the commercial mortgage-backed securities (CMBS) market’s near miraculous turn around and the bonds’ plunging spreads, as well as indications of deteriorating credit quality, suggest buyers should beware.

The average spread on ‘AAA’ tranches is nearly half last August’s, falling to 75 basis points in mid-May from 143 basis points last summer, while lower-rated bonds have fallen even further, according to Trepp.

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