In a research report released Thursday, Merrill Lynch looked at whether ABS widening will spell trouble for the CMBS sector. Analysts specifically addressed market concerns about the residential housing downturn and how this event could impact commercial real estate and CMBS.
These concerns have been in the minds of market players recently with the subprime ABS market experiencing a noticeable spread widening - at least as indicated by how the ABX index has traded, Merrill analysts said. For instance, the triple-B minus 06-2 index came close to the +1000 level earlier in the week last week, or out from +750 a week before that and sub 500 a month back. Merrill said that it has since recovered some and was closer to 870 basis points over as of last Wednesday night's close.