Securitization of commercial mortgages was down slightly in 2016 as a result of a sharp drop in the non-agency commercial MBS market, according to a new Inside MBS & ABS analysis. Meanwhile, the agency multifamily MBS platforms cranked out record new issuance last year. In total, some $209.03 billion of commercial-property MBS were issued last year, a 3.1 percent drop from 2015. It still ranked as the second most-productive year in commercial MBS issuance since 2007, the year before the financial market meltdown. But non-agency CMBS issuance fell...[Includes one data table]
This year, the commercial MBS market will see the influence of the newly effective Securities and Exchange Commission rule on CMBS risk retention, which likely will mean higher credit quality but also a degree of unpredictability when it comes to issuance, according to industry analysts. At Wells Fargo Securities, analysts who cover the CMBS space are forecasting non-agency issuance of $65.0 billion in 2017. “While CMBS issuance has historically grown with the economy, this is not exactly the typical cycle,” they said in a recent client note. “Economic growth has been uneven and property fundamentals seem to be maturing.” Requiring CMBS issuers to retain at least 5 percent of the credit risk adds...
Higher capital charges and the cost of capital associated with risk retention mandated by the Dodd-Frank Act will make commercial MBS less competitive with portfolio lending for loans backed by high-quality collateral, according to a new report from Moody’s Investors Service. The report stems from a Moody’s fourth-quarter 2016 analysis of three conduit transactions that were structured to comply with risk-retention prior to its implementation on Dec. 24, 2016. In each of the transactions, issuers retained 5 percent of either the securities or the collateral pool’s cash flows. In addition, the Moody’s report noted...
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