Though last week was viewed by commercial mortgage-backed players to be the final week for the marketing of new CMBS issues, investors lost no momentum in their drive to devour attractive bonds.

Reaping the advantages of pricing after the U.S. presidential election crisis was settled, the Lehman Brother/UBS Warburg conduit, for $996 million, was said to have fared extremely well, though one market source noted that "the five-year got a little hung up." The majority 10-year part of the issue came at talk levels, with the $439 million, 9.71-year senior tranche printed at +41 over 10-year swaps.

The A1 5.87-year tranche came three basis points wider than pre-launch levels, at 32 over. The well-marketed issue was hedged with swaps, and provided a decent lift to 10s, and to a lesser extent 5s, as size-buying in both issues went through at the deal's pricing.

"Lehman/UBS probably could have gotten it done a little inside of [the three basis points], but they had some big orders to take care of," said one banker knowledgable about the deal. "Everything else was on the button. It was a very well subscribed deal."

There were many large loans in the deal that were very high quality, which certainly helped the pricing. Additionally, 28% of the cashflow was investment-grade, "and people really liked that," a source noted.

"The Lehman deal was very strong on a loan-by-loan basis, and it had excellent escrows," said another CMBS source. "But more interestingly, it had high levels of SPEs. It had the highest level of lock boxes that I ever saw in a deal."

The source added that this was probably done because the pool was lumpier and the underwriters made an effort to really structure it. "People are not tiering as much but they are looking at what is in the pool, and Lehman definitely had a nice pool for this deal," the source added.

Lehman/UBS Warburg is slated to have another $600 million to $800 million CMBS conduit out in March or possibly early April.

Solly: Victim of Election Chaos?

While the Salomon Smith Barney SBM7 2000-C3 conduit, for $914.7 million, did decently in the market, sources said it had two forces working against it: firstly, it priced directly after the GMAC CMT deal, which reportedly did not go so well and was said to still have unsold bonds; and secondly, the Solly deal priced during the very heart of the unpredictable court decisions of last week's election roller-coaster.

"I thought the SSB deal was a good deal but a lot of people didn't like it, and I don't know why," one source noted.

"The GMAC deal priced wide, and two hours after the Salomon deal launched, the Florida Supreme Court announced that they were going to keep counting," another CMBS player said. "Then, when it priced on Tuesday, the U.S. Supreme Court made its final decision, and the deal priced in the midst of uncertainty, as did the GMAC deal. After that cloud lifted, things calmed down."

"Plus, Salomon wanted to get the deal done, and do a cash deal," noted another player. "So I'd almost classify it as a Christmas present to investors."

While the Solly deal did not fare as well as the Lehman/UBS conduit, market opinion seemed to indicate that it did far better than the previous week's GMAC conduit. The Salomon deal had very low retail - 18%, versus 41% for the GMAC deal - and it had a very low LTV from Moody's Investors Service, 83.6%. Additionally, the deal had four loan sellers and was done outright, and not on swap.

Sources indicated that there was a perception that the GMAC deal didn't fully count because it was not fully cleared, though that could not be confirmed. The buzz on the Street was that GMAC still had not sold its IO by press time and A2 bonds were still available.

Additionally, the second largest loan in the GMAC conduit had exposure to an undisclosed movie theater, which sources said was Regal Cinema.

"Investors tend to think there was sloppy distribution on the GMAC deal," noted a trader. "While the Lehman deal was better than the Salomon deal overall, the Salomon deal was light years better than GMAC, but a lot of market participants were considering SSB to be the first to go because the GMAC deal is not even cleared."

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