With CMBS supply expected to dip in 2003 - causing triple-A CMBS spreads to tighten further -analysts believe technicals will improve for CMBS spreads, as the sector's steady performance in the last couple of years has created a growing investor base.

Various firms predicted a drop in CMBS issuance for 2003. Salomon Smith Barney researchers said that they expect a strong first half of issuance. However, fixed-rate issuance will drop, expected to finish the year below $30 billion. This is due to fewer loan originations because of a low level of loans maturing as well as higher interest rates.

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