Decreasing risk appetite may slow CMBS issuance, but some investors are returning to the B-piece market after spread widening, according to a Standard & Poor's report.

Issuers have placed an estimated  $1.3bn B-Pieces from 15 conduit/fusion CMBS with 7 different firms YTD, according to S&P.

Active B-piece investors this year include Rialto, Blackrock , Torchlight , H/2, CBRE, Lennar, and Northstar . Torchlight has been the most active in recent deals, investing in 3 of the last 7 offerings.

Since late May, new issue 'BBB-' spreads have widened out 400-500 bps, potentially attracting new investors, although risk appetites have waned for any classes below the super-seniors during the last few months.

The S&P report  indicated that both Lennar and Blackrock returned or are set to return to the B-piece market after a 6-month hiatus.

Shopping the B-piece is an integral part of structuring a CMBS transaction. Traditional B-piece buyers underwrite lower tranches in CMBS transactions. They are capable of working out loans that go into special servicing for the best recovery value.


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