A single-borrower deal and a conduit commercial mortgage securitization priced this week, bringing private-label issuance for April to $3.6 billion – barely half of March’s $7 billion.
The $900 million CD 2017-CD4 priced Friday afternoon, with the 10-year benchmark AAA pricing inside of guidance by 2 basis points at Swaps plus 92 basis points, according to JPMorgan. Both sponsors, Deutsche and Citi will comply with the risk retention requirement on this deal via a vertical interest. (By comparison, several recent transactions have relied on a hybrid strategy, with the sponsor retaining a vertical strip and a third-party retaining a horizontal strip.)
Trepp attributed the strong reception to the scarcity of new supply. "Given that no new conduits priced in the past month, investors and traders were eager to see a new benchmark deal come to market," the data provider said in an email commentary.
The"more-than-respectable" pricing of CD 2017-CD4 "should give issuers confidence for the remainder of spring, as May and June have been billed as busy months for new issuance," it stated.
The single-borrower deal, the $442mn GSMS 2017-GPTX, is backed by multiple properties in Houston Texas; it priced on Thursday in line with the last fixed-rate single borrower deal (OMPT 207-1MKT) in mid-February, according to JP Morgan. The AAA, AA, and single-A classes of pay swaps plus 90 basis points, 115 basis points and 135, basis ponts, respectively, about in line with the last single-borrower office deal in mid-February.
Sponsor Goldman Sachs is expected to fulfill the risk retention requirement via a vertical strip of securities.
The loan underlying GSMS 2017-GPTX is a 3.75% five-year fixed rate loan and serves to recapitalize the property under the joint venture transaction between the majority sponsor Parkway Properties (51% ownership) and the minority sponsors Canada Pension Plan Investment Board (24.5%) and Permian Investors LP, a joint venture between TIAA and Silverpeak (24.5%).
Trepp said that the market reaction to this deal was "highly anticipated, especially since there is so much office space in Houston currently available for sublet."
The two deals bring year-to-date issuance to $16.2 billion, about 17% below last year’s pace. However JPMorgan sees activity picking up in May, putting total second quarter issuance at $18 billion.
One other conduit deal is currently being marketing, the $703 million MSBAM 2017-C33.
Two U.S. CLOs refinance, Middle Market Deal Prints
In the collateralized loan obligation maket, two more deals refinanced, Anchorage Capital's Anchorage Capital CLO and Apollo Credit Management's ALM XIV. And Ivy Hill, a unit of Ares Capital Corp., printed a middle market deal.
The London office of Commerzbank AG Debt Fund Management launched its European CLO, with a targeted portfolio of €346.2 million. Like Commerzbank’s previous two CLOs, the deal, dubbed Bosphorus CLO III, will be largely static with limited ability reinvest.