The calendar has been more a topic of discussion than anything else of late with secondary market flows in CMBS nearly at a halt. With a still manageable and steady flow of supply in the pipeline, spreads in the high-credit sector are not at risk of cheapening. In fact, triple-A spreads remain a couple of basis points outside of the six-month average of 47 basis points to swap in the 10-year sector. Most shops consider current spread levels on AAAs to be fairly valued to slightly rich versus other spread sectors, namely RMBS, home-equity ABS, and agency debt.

That triple-As remain a well bid sector is no surprise, especially given the woes of the corporate market and subsequent crossover buying into CMBS. The other technical event keeping spreads tight is the light pace of supply. Greenwich Capital estimates domestic supply to be 17% lower through April 2002 versus the same period last year and that total 2002 issuance will be 20% less. This is not, however, due to a drop in conduit volume.

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