There is a pickup in CMBS issuance at the start of this year, which falls in line with expectations of a busier new-issue CMBS market for 2011. 

Deals from Deutsche Bank, UBS, Goldman Sachs and JPMorgan are filling the CMBS pike.

"Though the entire size of the so-called CMBS 2.0 universe securitized since 2009 is still relatively small at $11 billion combined, we expect a pickup in securitization this year, with about $30 billion of CMBS paper being issued in 2011," Barclays Capital analysts estimated.

Deutsche Bank and UBS are expected to bring a $2.5 billion CMBS transaction next month, according to a Bloomberg report.

The deal is backed by loans on office buildings, shopping malls and hotels. It is the biggest offering of this kind since the market came to halt in June 2008, the Bloomberg report said.

Additionally, GS Mortgage Securities Corp. II has filed an S-3 with the Securities and Exchange Commission to issue a CMBS secured by a pool of fixed-rate, first lien mortgage loans on various types of commercial and multifamily properties. For the full filing, please click on this link.


JPMorgan is also planning to sell $1.5 billion transaction expected to come to market next month.

Placing B-pieces

Deutsche Bank and UBS have reportedly placed their transaction's B-piece with BlackRock. When asked by ASR to comment, BlackRock would not confirm its involvement on the offering. although it has been a regular buyer of B-pieces.

According to Barclays analysts, most B-pieces from 2010 conduit deals were scooped up by a few buyers including BlackRock, Elliott Management and H/2 Capital Partners.

A market expert said that BlackRock's, considering that it is an experienced CMBS credit player, decision was likely based more on a relative value view and its faith in the collateral/underwriting in CMBS 2.0 instead of any additional disclosures resulting from the current regulatory environment.

"It does not surprise me that they shopped the B-piece before the seniors," said Scott Buchta, head of investment strategy at Braver Stern Securities. "This is how things used to be sold as the sale of the credit piece helps to price the whole deal. Given the extra disclosures that will be required by the regulators, we may eventually see more people look to enter the new-issue CMBS credit markets."

If the market is to take off in a significant way, more traditional B-piece buyers, which are associated with special servicers, still need to re-enter the market to support an increase in issuance.

Barclays analysts said that, so far, only Rialto Capital Management, a newcomer to the special servicer sector, is the only known player to have bought a B-piece.

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