JPMorgan has noted that generic (non-Moody’s) BBBs were priced at unusually wide concession to JPMorgan’s index of 20 REIT bonds. Since last December, analysts have viewed the cheapness of BBB CMBS to REIT paper as a "confirming signal" for down-in-quality trades and more recently as a profitable cross sector trade idea inits own right. The latest BBB spread tightening coupled with wider REIT spreadssuggests that many long BBB/short REIT bond positions have earned 10bps on each "leg" (for a total of 20bps) since May 16.
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Both pools have exposures to large dealers, so losses could be more pronounced if one dealer goes bankrupt, while both series have revolving periods, when noteholders will not receive any principal.
May 3 -
The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency issued a 30-page guidebook on managing affiliate risks. The report builds on formal guidance issued last year.
May 3 -
In talks with OCC officials, "it became obvious that we would not gain near-term approval given their recent experience with multifamily and CRE positions," FirstSun CEO Neal Arnold says. The companies announced other revisions to their deal, too.
May 3 -
Subordination provides credit enhancement to the notes, as well as deposits in the reserve and redemption accounts.
May 3 -
The capital structure features initial exchangeable notes among the class A, mezzanine and B1 notes. The super senior and senior support tranches will repay noteholders on a pro-rata basis.
May 2 -
The company's branches and loan officers will transition to ML Mortgage but operations staff are not part of the deal.
May 2