JP Morgan priced its JPMCC 2012-LC9 commercial mortgage backed conduit deal on Wednesday. The transaction is the last scheduled for 2012.
The bank sold the short dated, 2.74-year, triple-A bond at a spread of 25 basis points above interest-rate swap rates, according to a Securities and Exchange Commission prospectus. The 4.78-year, triple-A bonds sold at 40 basis points, the 6.88-year triple-A’s sold at 90 basis points, the 9.86-year triple-A bonds sold at 85 basis points and the 7.28-year triple-A bonds sold at 80 basis points.
That compares with a CMBS conduit deal that Deutsche Bank and Cantor Fitzgerald sold last Thursday, where the top-rated, 10-year AAA class sold at 88 basis points above interest-rate swap rates.
Over the course of 2012, investors have been increasingly pouring money into CMBS and related funds, as investors see a recovery in the commercial real estate market and chase the attractive CMBS yields. According to figures reported by Trepp, year to date conduit issuance is at $31 billion, up from $25 billion for all of 2011. Unlike other types of lending, CMBS originations are expected to accelerate next year to keep up with growing demand for the product, according to a report published today by the Off Market Association. OMA predicts a 50 percent increase over 2012 issuance, which means that conduit activity could reach a total of over $60 billion in 2013.
But Fitch Ratings warns in its 2013 outlook report that CMBS financing still faces headwinds from the ongoing Eurozone crisis and U.S. fiscal cliff issues. This, the ratings agency said, could lead to an overall lack of liquidity in the market, though the “best properties in gateway markets will continue to be attractive to finance.”