A merger-related CMBS bid list totaling more than $1 billion traded last week and commercial mortgage-backed participants are calling it the largest bid list ever seen in the CMBS market.
Sources said that the list was part of the CMBS portfolio of Summit Bancorp., which completed its merger with FleetBoston Financial last week. Fleet is reportedly selling a total of $8 billion of Summit-owned securities, comprised of $7 billion of agency and non-agency CMOs, in addition to this billion-dollar block of CMBS.
"I have been in CMBS a very long time, and I have never seen a bid list of this magnitude," said a Street CMBS veteran. "There are very few portfolios this large, much less bid lists."
The combined Fleet/Summit, with assets exceeding $200 billion, will rank as the nation's seventh largest bank holding company with some 60,000 employees and 22 million customers worldwide.
Sources say that Bear Stearns got exclusive dibs on the $7 billion of agency and non-agency CMOs, but Fleet was proceeding on a much more sensible line with respect to the CMBS sale.
The sale of the Summit CMBS assets coincided with the day that the Fleet acquisition of Summit was finalized. "One wouldn't move to sell any assets until the effective date of the acquisition," a source said. The Fed gave Fleet the final approval to acquire Summit last week, and the deal was finalized last Thursday.
The bid list, totaling $1,099,052,265, consisted entirely of triple-A rated securities, five-year and under seasoned paper.
The list came on the heels of a smaller bid list last Thursday morning for $270 million, meaning that nearly $1.3 billion of CMBS traded in one day.
"We've seen very active secondary trading in CMBS all year," said the source. "I've seen a lot of sizeable bid lists, ranging from $50 million to $200 million."
Five-year triple-A CMBS were three basis points wider on the week, and two basis points wider than they were at the end of 2000.