NEW YORK CITY-Trepp LLC reports that with spreads tightening, delinquency rates falling and new issuances rising, the outlook for the CMBS sector is bullish. In fact, investors expect $80 billion or more in new issuances this year.
If issuances reach that level, 2013 would be almost double the total for 2012 and would therefore reach the highest level since the peak of approximately $230 billion in 2007.
One CMBS category that continues to lag is the 2007 vintage of CMBS loans, Trepp reports. The delinquency rate for 2007 CMBS issued loans has remained stubbornly high over the last year despite all the positives for the market. Over the past 12 months, the average delinquency rate for the 2007 vintage is 14.6%, well above the overall rate, which was 9.42% in February.
Trepp says that at present since very few 2007 loans are reaching maturity, any new defaults will not be balloon defaults. If the delinquency rate continues to stay flat or creep lower, it will mean that any loan resolutions are being replaced by new term defaults. This would be troubling, especially given the recent strong winds behind the commercial real estate markets.
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