Trepp Highlights the Good, Bad, and Ugly of CMBS Market in 2016

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Trepp released its Good, Bad, and Ugly research piece today, which examines the highs and lows of the CMBS market thus far in 2016.

CMBS New Issue Spreads

Spread widening and the ensuing lull in new issuance early in the year put a damper on what had been high expectations for 2016.

Trepp, LLC, the leading provider of information, analytics, and technology to the CMBS, commercial real estate, and banking markets, published new research on the good, the bad, and the ugly of the CMBS market thus far in 2016. Details from the report can be accessed here: http://info.trepp.com/good-bad-ugly-h1-2016-press-release.

“Spread widening and the ensuing lull in new issuance early in the year put a damper on what had been high expectations for 2016,” said Joe McBride, Research Associate at Trepp. “On the other hand, a post-Brexit delay in the Fed’s plans for a rate hike could be a boon for CRE borrowers and CMBS lenders as the year progresses.”

Trepp’s research highlights an ugly start to 2016 thanks to investor concerns about macro issues, such as falling oil prices and the Fed’s first rate hike. As a result, fixed-income spreads widened and essentially halted CMBS conduit lending. Though spreads recovered from the severe blowouts, 2016 CMBS issuance is still well behind last year’s pace.

Trepp’s research does offer some positivity for the CMBS market. Trepp’s data reflects that new CMBS issuance was also slow in the first half of 2014, before skyrocketing by 50% in the second half. Additionally, the CMBS delinquency rate reached its lowest mark since 2009 in February 2016. The resolution of the StuyTown loan also improved the multifamily delinquency rate by nearly 600 basis points.

Trepp’s ‘The Good, the Bad, and the Ugly’ research stresses that there are still plenty of market concerns. Another round of big-box retail store closures in 2016 highlights the strife in that sector. CMBS loss severity has also climbed this year, thanks to lower liquidation volumes. All things considered, there is still hope for the remainder of 2016 as new issue spreads have ebbed back into normalcy and housing data remains steady.

A complimentary copy of the report can be downloaded at http://info.trepp.com/good-bad-ugly-h1-2016-press-release. For daily CMBS and commercial real estate commentary, be sure to follow @TreppWire on Twitter.

About Trepp
Trepp, LLC, founded in 1979, is the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets. Trepp provides primary and secondary market participants with the web-based tools and insight they need to increase their operational efficiencies, information transparency and investment performance. Trepp serves its clients with products and services to support trading, research, risk management, surveillance and portfolio management. Trepp is wholly-owned by dmgi, a division of the Daily Mail and General Trust (DMGT).

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Sean Barrie
Trepp
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