For some time Merrill viewed the triple-B sector as the cheapest part of the mezzanine curve, especially vs. single-As, and expected them to outperform higher rated bonds as well as REIT debt. While triple-Bs have come in over the last several weeks, new issue pricing indicates they are substantially tighter than just a few days ago. At current levels the shape of the CMBS credit is a lot closer to fair value than it has been recently.

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