The political unrest that is taking place in the Middle East has trickled over to U.S. CMBS market spreads, Barclays Capital analysts said.
Spreads on 2006-2007 dupers widened 10 basis points and GG10s were off close to 30 basis points, according to analysts. They are now trading in the 200 basis points over swaps.
The weakness was felt across vintages and lower down in the credit stack as well. The 2005 last cash flows gapped out two to five basis points, AMs and AJs ended the week 10 to 15 basis points off last week’s levels, the Barclays analysts said.
However, they explained that, despite the widening, a number of accounts showed they were willing to add GG10 exposure at the current levels.
"We view this week’s spread widening as a temporary correction related to macro concerns and do not expect a long-term reversal of the prior tightening trend," analysts said. "Rather, we view it as a buying opportunity for selected parts of the capital structure. As such, we add to our long 2007 AM trade in our credit portfolio."