There are those who predict that the next sky to fall with be the one above CMBS. The question for our markets is: Will it also land on leveraged finance?
“There is no doubt that [a widespread collapse in the CMBS market] would impact the leveraged finance market,” said a California-based investor. “There is a general correlation between the debt markets. If CMBS goes bad, other assets will sink with it. It would detrimentally impact the amount of capital banks have to redeploy to other assets, not to mention the general negative impact on the economy and therefore corporate credits.”