The new-issue CMBS market closed out the first quarter with three conduit deals that offered over $3 billion in rated securities, bringing total issuance to around $19 billion.
On Wednesday of last week the $1.08 billion MSBAM 2014-C15 priced its super senior, 10-year notes at swaps plus 90 basis points and the 10-year, triple-B minus tranche at swaps plus 370 basis points.
Two more deals priced on Thursday: the super senior, 10-year notes and the triple-B notes from GSMS 2014-GC20, a $1.2 billion deal, priced at 88 basis points and 355 basis points over swaps, respectively. The $1.06 billion COMM 2014-CCRE16 has super senior, 10-year notes and triple-B rated notes that priced at swaps plus 88 basis points and swaps plus 365 basis points, respectively.
Total first-quarter issuance represents a decline of 13% over the year-earlier period, when about $21.6 billion was issued, according to a report published this week by Deutsche Bank. However the supply of conduit deals is up 25% on the year; the overall decline is the result of a 50% decrease in issuance of single-borrower deals.
Despite the significant drop in single-borrower deals, analyst at Deutsche bank still expect 2014 gross issuance will total $100 billion, comprised of $80 billion of conduits and $20 billion single-asset r single-borrower transactions.
One reason for the slower pace of issuance this year, according to a recent report by JP Morgan, is the higher volume of loans in deals that are being defeased. Defeasance is the substitution of collateral for a loan that has been securitized. This is usually done to facilitate a sale or refinance of the mortgaged property. “Some borrowers refinanced early to offset risks of higher rates particularly following the “taper tantrum” rate sell-off in mid-2013," the report stated.
Other factors at play include the light conduit maturity schedule for 2014 ($45 billion), limited “jumbo” single asset deals to date, and increased competition from alternative lenders.