The second week of the year has passed, and still the CMBS calendar remains barren. This should come as no alarm, however, as the huge spate of issuance toward the end of 2001 was more than enough to distribute and upcoming industry conferences in January slow down activity. Despite, and in light of the supply dearth, spreads have made impressive strides in the face of investors, flush with cash, making for well-diversified spread products.

At the moment, spreads for triple-A 10s have narrowed to 46 basis points over swaps, down from 54 basis points as of the final conduit pricing of 2001. This has come on solid secondary market interest on expectations that supply may be lacking well into the first quarter. Note that at 46 basis points, this puts CMBS back to pre-Sept. 11 levels and within the tights of the 2001.

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