Little has changed in the CMBS market of late. There continues to be decent demand for paper, all the while bid lists are made active by money managers willing to make room for upcoming supply. Spreads remain in a narrow range, and for the most part, there is a preference for triple-As as well as below investment-grade credits.
The reasons to expect the bid for CMBS to continue are rather pedestrian - uncertainty over the state of the economy, not to mention geopolitical risks, have investors looking for sectors of the market that allow a reasonable yield for reasonable risks. Corporate bonds are largely expected to outperform CMBS once investor confidence in the economy returns, but in the meantime, there is too much headline risk in the product. CMBS paper offers the liquidity, diversification, prepayment protection and sound fundamentals not available in other areas of the market.