Another $2 billion of commercial mortgage bonds priced on Thursday, bringing the total for the week to $7 billion.
Morgan Stanley and Bank of America Merrill Lynch priced a $911 million conduit backed by 65 fixed-rate commercial mortgage loans that are secured by 100 properties while Deutsche Bank and Cantor Fitzgerald priced a $1 billion-plus conduit.
Spreads on the 10-year, triple-A rated super senior tranches of both deals priced in line with a simlar tranche of another conduit that JP Morgan and Barclays brought to market this week, JPMBB 2014-C23.
The super senior tranche of MSBAM 2014-C18 priced at swaps plus 82 basis points. DBRS, Moody’s Investors Service and Kroll Bond Ratings assigned ratings to the deal.
The super senior tranche of Deutsche Bank and Cantor Fitzgerald’s COMM 2014-LC17 priced at swaps plus 83 basis points. That deal was rated by Moody’s, Fitch and DBRS.
By comparison, the 10-year, super senior class of JPMBB 2014-C23 priced at swaps plus 84 basis points.
At the senior tranche level, there was some more differentiation. The senior tranche of MSBAM 2014-C18 priced at a swaps plus 100 basis points. However the same tranche of COMM 2014-LC17 priced 10 basis ponits wider, at swaps plus 110 basis points. That may be explained by the fact that the latter was split rated; Moody’s assigned the notes an Aa1’, while Fitch and DBRS gave them their highest marks.
The senior tranche of JP Morgan and Barclays deal, which were also split rated, also priced at swaps plus 110 basis points.
Further down the capital stack, MSBAM 2014-C18's 10-year, AA’/ Aa3’/ AA’ notes priced at swaps plus 140 basis points. COMM 2014-LC17's Aa3’/ AA’/ AA’ notes priced at thee same level.
However the 10-year class C notes issued by MSBAM 2014-C18 were not rated by Moody’s and only received two ratings of A’/’A-’ by DBRS and KBRA. The notes priced at swaps plus 200 basis points, 15 basis points wider than the 10-year A3’/ A’/ A’ notes sold by COMM 2014-LC17.
The loans issued from the trust, MSBAM 2014-C18 have principal balances ranging from $2.1 million to $106.6 million for the largest loan in the pool, TKG Retail Portfolio A (10.3%), which is secured by four anchored retail centers in Colorado, Pennsylvania, and Louisiana.
Most of the loans, or 79.5% of the pool, pay interest only; either for part of their terms (58.3%) or their full terms (21.2%).
KBRA noted in its presale report that the pool includes 35 loans, representing 63% of assets, with loan-to-value ratios, as measured by the rating agency, in excess of 100%. That is a greater percentage than the average conduit KBRA has rated over the last six months. The exposure to high leverage loans in these transactions ranged from 49.4% to 73.2%.
COMM 2014-LC17 is backed by 71 fixed-rate loans secured by 207 commercial and multifamily properties. Two loans within the top 10, Loews Miami Beach Hotel and Aloft Cupertino, represent 12.5% of the pool.
Ten loans representing 26.5% of the pool (including three of the 10 biggest loans) pay only interest for the full loan term. An additional 27 loans, representing 32.9% of the pool, have interest-only periods ranging from six to 60 months.
