Morgan Stanley, Wells Fargo and Bank of America are marketing $725.6 million of commercial mortgage bonds designed to meet requirements from regulators on both sides of the Atlantic to keep “skin in the game” of their deals.
The three banks are expected to purchase and retain 5% of each class of securities issued by Morgan Stanley Capital I Trust 2016-BNK2, or approximately $36,278,582, according to Fitch Ratings. In addition, the effective interest rate on their collective holdings is equal to the weighted average coupon of the deal. This is known as the vertical option for complying with U.S. rules that take effect Dec. 24. It’s the same strategy the trio employed in the first U.S. risk retention compliant deal, completed in August.