In the latest episode of the NAREIT Podcast, Manus Clancy, managing director with Trepp, discussed some of the latest developments in the commercial mortgage-backed securities (CMBS) market.
Clancy described the market as “benign” from January to early June. Spreads began widening in June, he said.
Clancy said the widening in the CMBS market can be attributed to a number of factors in the current environment. Among them, lack of liquidity began weighing on investors, according to Clancy. Additionally, the potential for interest rate hikes is impacting spreads, he said.
“Taking that all into consideration, investors demanded more return over the course of the last 30 to 45 days,” Clancy said.
CMBS issuance has been “terrific,” according to Clancy. “On an absolute basis, the terms for new lending are still very compelling,” he said. In fact, borrowers are trying to lock rates in for the long term, Clancy said.
In terms of the strongest spots in the CMBS market, Clancy listed securities tied to gateway markets such as New York and San Francisco.
“All of these markets seem immune to any downturn,” he said.