As several commercial mortgage-backed deals priced at surprisingly tight spreads last week - one source even described the $225 million Houston Galleria CMBS deal as a blowout' - market players noticed a very strong interest on the part of investors in the mezzanine pieces of deals; so much so, in fact, that apparently there are not enough B-pieces to satiate investors' overwhelming demand for them.

"It appears to me that it doesn't matter if you're doing a single-asset transaction, a floating-rate transaction or a fixed-rate transaction - mezzanines are well oversubscribed," said one CMBS trader. "They've been tightening tremendously in these last couple of deals. There's been a flattening of the credit curve for quite some time now it is continuing, and could go a lot longer."

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.