The mounting pipeline of summer CMBS deals are likely to price wide across the capital structure as investors react to macro-economic uncertainty, Bank of America Merrill Lynch analysts said in a CMBS securitization report this week.
They explained that the pipeline over the next two months is likely to include six conduit deals totaling $7.5 billion. Pricing on the offerings is expected to keep in line with trends experienced over the past weeks that include both widening spreads and a steepening of the credit curve resulting from yield-driven triple-A buyers requiring higher yields, while credit buyers demand greater risk premiums.
"Ultimately, we anticipate that triple-A spreads will widen, that the triple-A to single-A credit curve will flatten and that mezzanine bonds spreads (single-A and below) will widen relative to double-As," analysts said.
However, analysts also said that the extent to which spreads widen will be deal-specific as investors increasingly differentiate among transactions.
