As issuance of CMBS ramps up again, so do concerns about the deterioration in the quality of loans used as collateral.

Spreads investors were willing to accept on CMBS narrowed early in the year amid a broader decline in risk premiums and a reach for the relative yield offered by these securities. At the end of March, the average CMBS 2007 super-senior tranche traded at 194 basis points over swaps, down from 320 basis points over swaps six months earlier, according to Trepp.

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