The Federal Reserve Bank of New York received $1.3 billion in loan requests for legacy CMBS during the December TALF subscription.
Over the last five months, since legacy CMBS has been acceptable collateral, the Fed has made approximately $7.2 billion in loans to purchase existing CMBS.
Of the $1.26 billion in new issue CMBS done this year, only about $80 million was done using TALF.
“It might seem like an easy conclusion to reach that the CMBS market does not need TALF anymore, but that may not be the right conclusion," said Malay Bansal, managing director of commercial real estate asset management & advisory services at NewOak Capital. "These deals have benefited from being the first ones after no deals for 18 months and the pent up demand from dearth of new deals.
More importantly, Bansal said that these deals are single borrower transactions where the loan originator did not take risk of bond spreads, which was borne by the borrower.
He added that the real test of the CMBS market functioning well will be multi-borrower transactions where the loan originator will have to take the execution risk on bond spreads. Those offerings, Bansal said, will take time and will need all the help they can get. At the end of the day, he emphasized that TALF acts as insurance and remains useful even though it is not used heavily.