Deutsche Bank and Cantor Fitzgerald priced $1.1 billion of commercial mortgage backed securities several basis points wide of initial guidance.
COMM 2014-CCRE19 contains super senior, triple-A rated notes with a ten-year weighted average life that priced at swaps plus 90 basis points, two basis points wider than guidance and five basis points wide of JP Morgan and Barclay’s $1.1 billion JPMBB 2014-C22 transaction, which priced on Aug. 6, according to deal documents.
The privately placed, triple-B minus notes priced at swaps plus 370 basis points, 25 basis points wider than guidance, according to a Bloomberg report. JPMorgan and Barclays priced the triple-B minus portion of their $1.2 billion offering to 345 basis points.
Analysts at Bank Of America Merrill Lynch said in a report this week that macro economic events coupled with deteriorating underwriting standards in CMBS and a heavy issuance calendar has led to more tiering in CMBS pricing in recent weeks.
COMM 2014-CCRE19 benefitted from diverse property types that included office (26.6%), lodging (20.8%), multifamily (17.2%), retail (16%), and mixed use (9%) assets, according to Kroll Bonds Rating Agency (KBRA).
However the pool has relatively low exposure to primary market properties. According to KBRA, the exposure of 36.0% is lower than the average of the last 16 CMBS conduits it has rated.
The pool also has exposure to 41 high leverage loans with loan-to-value ratios in excess of 100%. That’s higher than the average of the 16 CMBS deals Kroll has rated in the last six months. Higher leverage implies lower borrower equity levels, greater default probability, and higher overall loss severity should a default occur.