CMBS triple-As are starting to look like fairer value in SSB’s triple-A regression. However,  spreads could widen a couple bps further. Thus, remains neutral on triple-A spreads. CMBS single -A and triple –B spreads could trade right on top of corporate spreads, but would feel pressure if they traded inside of corporate spreads for a sustained period. Triple-B CMBSs have made a significant tightening move and could spend the next few months looking relatively rich. Triple-B spreads would lag any widening in corporates. With CMBS subordinate spreads seeming slightly rich, the market may focus on CMBS IO spreads, which could tighten in the coming months.

 

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