Two important tender offers have been launched in the European CMBS market in the past two weeks.

The first was a buyback of notes from senior down to junior levels of the largest German multifamily CMBS, GRAND 2006-1.

The second tender offer closed on April 8. Property firm Songbird Estates was buying back three classes of the outstanding notes — B3, C2 and D2.

Societe Generale analysts said that the results reflects a combination of note holders being less willing to sell as credit risk had improved — measured by the ratings of the bonds — and the fairly low prices at this point in time.

Both tender offers confirmed the current prevailing opinion in the CMBS. "There is strong concern about future developments in the real estate market and particularly about the refinancing of certain transactions," analysts said. "However, this may be offset, depending on the level of credit exposure of the notes held (as shown by the ratings) and also on the timeframe for refinancing. GRAND, for example, is due for refinancing in 2014."

For the GRAND 2006-1 the originator/sponsor Terra Firma, through its subsidiary, was unable to buy back any senior notes at the proposed prices (Class A, proposed clean price of 70 basis points). The firm was however able to buy back a number of mezzanine and subordinated notes.

The second tender offer had results published the following day. Songbird Estates  was buying back three classes of the outstanding notes — B3, C2 and D2.  According to SocGen, overall, the company bought back roughly £119.7 million ($177.2 million) of notes in nominal for a total amount of £35.5 million.

However, at the last minute, analysts said that Moody's Investors Services downgraded today the ratings of these tranches to 'A1', 'Baa1' and 'Ba1' for classes B3, C2 and D2 respectively.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.