The $1.3 billion COMM 2012-CCRE2, a conduit deal that includes loans from Cantor Commercial Real Estate Lending, German American Capital Corp., and Ladder Capital Finance, priced its triple-A tranche on Aug. 8 at 112 basis points over swaps, which is significantly tighter than the pricing guidance of 120 over swaps.
This tightening trend was also seen down the credit curve: the single-A rated C tranche priced at 335 over swaps, which is about 25 basis points tighter than the previous deal, according to figures cited in an Aug. 10 Barclays Capital securitization report.
"Overall the deal went quite well, with evidence of robust demand across the capital structure," said analysts at JPMorgan Securities in an Aug. 10 securitization report. "With this print, primary market CMBS spreads have recovered nearly all of their near-term widening."
However, Bank Of America Merrill Lynch analysts said in a securitization report from the same day that "the recent tightening of new-issue spreads and the flattening of the new issue credit curve has resulted in less room for those spreads to tighten over the near term – particularly at the top of the capital structure."
The analysts also noted that some of the spread tightening has also been driven by investor anticipation that the Federal Reserve will announce another round of quantative easing by September. If the Fed fails to respond to market expectation, it is likely that spreads will begin to soften.
