The latest conduit offering from JPMorgan and Ladder Capital called JPMCC Commercial Mortgage Securities Trust 2012-C6, priced this week, with the last cash flow pricing at 115 basis points over swaps, according to analysts at Barclays Capital.
The deal priced 10 basis points wider than the 10-year duper from the last conduit deal called WFRBS 2012-C6, and five basis points wider than initial expectations.
Barclays analysts said that the widening trend was more pronounced at the lower end of the capital stack with the 20% enhanced A-S class pricing 35 basis points off the WFRBS deal at 175 basis points over swaps.
Moody's Investors Service said today that it was issuing a provisional rating on the JPMorgan conduit. Fitch Ratings issued its provisional ratings on the offering last week.
The ratings are based on the transaction's collateral and the structure. Moody's said that the deal was rated based on Moody's actual debt service coverage ratio (DSCR) of 1.57X and its stressed DSCR of 1.07X.
Fitch said its ratings on the structure were based on a Fitch DSCR of 1.23x and LTV of 95.5%. The rating agency noted that the average DSCR and LTV for 2011 conduit offerings is 1.25x and 91.6%, respectively.
Moody's also noted that the DSCR and the stressed DSCR levels were greater than 2007 conduit/fusion transactions where the average levels of both came in at 1.31X and 0.92X, respectively.
Moody's said the trust LTV ratio it calculated, which was at 97.8%, is lower than the 2007 conduit/fusion transaction average of 110.6%. Moody's total LTV ratio, including subordinated debt, of 101.8% is also considered when looking at different stress scenarios for the rated debt.
Fitch also announced this week that it will rate the new UBS CMBS deal called UBS Commercial Mortgage Trust 2012-C1.
The CMBS is backed by a pool of 73 commercial mortgage loans secured by 100 properties. The rating agency said in a presale report that the deal also had higher leverage versus Fitch-rated 2011 transactions with a Fitch-stressed DSCR of 1.12x and stressed LTV of 100.5%.
Moody’s issued a report earlier this week indicating it was seeing weaker underwriting and higher leverage on deals scheduled for the second quarter. As a result, subordination levels on upcoming deals can trend higher, adding up to 50 to 100 basis points of credit support.
"While final pool composition is still subject to change, should the more highly levered Q2 transactions be issued as currently constituted they will see from 50 to 100 basis points of additional credit support across their investment-grade rated bond classes," said Tad Philipp, Moody's director of commercial real estate research. "Should the adverse credit drift continue in future quarters it will be met with further subordination increases."