Credit Suisse is marketing $767 million of bonds backed by 53 mortgage that are secured in turn by 199 commercial properties, according to rating agency reports.
The loans backing Credit Suisse Commercial Mortgage Pass Through Certificates, Series 2016-C7 were underwritten by CS affiliate Column Financial (52.2% of the pool), Benefit Street Partners (40.4%), and Silverspeak Real Estate Finance (7.4%).
Wells Fargo Bank is the servicer and Rialto Capital Advisors is the special servicer.
Among the strengths of the deal, according to Moody’s Investors Service, is the inclusion of two loans that, while not rated, have investment grade characteristics. These are backed by 9 West 57th Street (in Manhattan) and the GLP Industrial Portfolio B. They represent a combined $65.9 million pool contribution, or approximately 8.6% of the pool balance.
Among other strengths, the loans used as collateral amortize more than those backing several other deals that Moody’s has recently rated. Thirty-five loans representing 51.6% of the pool balance pay both interest and principal throughout their terms; another 25 loans (39.8% of the pool) pay only interest, and no principal, for part of their terms, while just two loans (8.6% of the pool) pay only interest for their entire terms.
Nevertheless, Moody’s considers the deal to be highly leveraged; it calculates the debt service at 114.8%. This would be even higher. 120%, if not for the inclusion of two, high-quality properties that skew overall metrics lower.
In terms of leverage dispersion, approximately 7.7% of the pool balance has a LTV, as calculated by Moody's, of between 100% and 110%, with 22.1% of the pool between 110% and 120%, 47.1% of the pool between 120% and 130%, 5.1% of the pool between 130% and 140%, 0.8% of the pool above between 140% and 150%, and no loans in the pool above 143.3%.
The pool also contains four loans encumbered by additional debt not included as trust collateral - GLP Industrial Portfolio B (2.6% of the pool balance) and Peacock Run Apartments (1.4% of the pool balance).
Credit Suisse's deal hit the market during what was one of the busiest weeks for new issuance so far this year: six deals totaling $4.7 billion were priced, according to JP Morgan. In a report published Friday, the bank said that investors appear to perceive that there is a difference in quality between deals backed entirely by bank-originated loans and those, like CSAIL- 2016-7, with a mix of collateral from banks and smaller originators.
This differential was most visibly in so-called last cashflow triple-A rated tranche of deals. In the two all-bank deals, JPMDB 2016-C4 and MSC 2016-BNK2, these tranches priced to yield swaps plus 111 basis points and swaps plus 107 basis points, respectively. The BNK2 deal had the added benefit of being compliant with impending risk retention rules.
The two other conduit deals that priced last week (CFCRE 2016-C6 and CGCMT 2016-C3), which included collateral contributions from smaller originators priced wider at swaps plus 117 basis points and swaps plus 114 basis points, respectively, according to JP Morgan.