Floating-rate triple-A CMBSs are now cheap relative to credit cards, but a heavy 1Q pipeline will likely stop them from tightening until May. In fixed-rate triple-A CMBS, leaves recommendation at neutral as triple-A spreads remain fair. In mezzanine investment-grade classes, double-As and single-As now appear historically rich. But triple-Bs have sold off and triple-Bs are 5bp cheap. Support and WAC IOs are cheap to fair value. Recommends IOs for the carry. At recent levels, PAC-like IOs appear fair to five-year triple-A CMBSs, but should tighten as the market starts comparing the sector to similar duration debt. Seasoned premium-dollar CMBSs are now cheap.
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