Life after FAS 140 was not so bad as three deals were in the premarketing stage last week: a $950 million deal through Salomon Smith Barney and Greenwich Capital Markets, a $1.4 billion deal from Lehman Brothers and UBS Warburg and Morgan Stanley's $300 million Sawgrass Mills deal.
The Salomon/Greenwich Capital deal is supposedly the first transaction to test the FASB waters, where the issuers had to come up with deal terms that enabled them to sell troubled loans out of the trust, and at the same time were compliant with FASB's Q&A. Lehman and UBS, on the other hand, sources say, were able to sell the subordinates before the Q&A was released two weeks ago so the deal is grandfathered under the old rules.
And after all the fuss over FASB, sources say that deals don't look very different than they were before.
Lehman/UBS, which is a fusion transaction with A/B notes (where the B note is not part of the trust) rated by Standard & Poor's and Fitch, includes the Chrysler building in its pool. The SSB/Greenwhich fixed-rate transaction, which includes Artesia collateral aside from SSB's and Greenwhich's, is highly diversified with a 115 herfandahl score, and with no loans above 2.3 % of the pool.
JPMorgan is expected to come to market with a transaction sometime this week.
In the meantime, the Canadian CMBS pipeline is filling up. After the Scotia Capital-led Mansfield Trust priced last Friday, TD Securities is due to come out with its Solar Trust transaction anytime now. Merrill Lynch is probably going to be shooting for August or the beginning of September to come to market with another deal. Caisse de depot et placement du Quebec is said to be working on two transactions and Manulife maybe considering a deal.