Investor demand for the securities is so low that there has been only one new issue backed by European property this year, a €695 million ($1.07 billion) issue by Morgan Stanley, and part of that hasn't sold.It's important to note that unlike the subprime mortgages, the default rate on the commercial-real-estate mortgages underlying the issues is only 0.3% in the U.S. for Fitch-rated loans, 0.2% in Europe and 0% in Asia.
There have been a few new CMBS issues collateralized by Japanese real estate this year, with a combined value of about $1 billion, according to Standard & Poor's. This includes one issue from Morgan Stanley of about $500 million in February. Last year, there were about $20 billion in Japanese CMBS issues.
"This year, we expect that figure to be 20% to 30% lower as securitization lenders are slowing down their new loan originations," says Takenari Yamamoto, a CMBS analyst at Standard & Poor's in Tokyo. Japan is the biggest CMBS market in Asia, accounting for the majority of issues.
Just €20 billion in CMBS issues are likely to take place in Europe this year, less than half of last year's figure, according to Barclays Capital. Of this, as much as 25% of the collateral is likely to be old loans on banks' books rather than new loans made, according to Hans Vrensen, head of European securitization research at Barclays Capital in London.
In the U.S., CMBS issuance this year is also expected to drop by more than 50% to $108 billion, according to Commercial Mortgage Alert.
Tuesday, March 25, 2008
Tuesday, March 25, 2008 Posted by Deal Junkie
We already know that the Canadian CMBS market vaporized overnight. Now it appears the slow down in the US CMBS market is affecting Europe and Asia. From WSJ: