Anyone watching the CMBS investment market in recent weeks has seen some warning signs. Spreads have widened, while ratings agencies such as Moody’s have expressed concerns about “deteriorating credit quality.”
“There is some definite nervousness in the market, and it is not clear yet which way the market will move,” says Manus Clancy, senior managing director at research firm Trepp. CMBS spreads started to widen in June, including one big move that occurred in late June/early July and a second big move in early August as it relates to new issuance.
“We believe that has more to do with the general skittishness of the global economy, the slowing growth in China and the potential unintended consequences of a rate hike from the Fed than it has to do with the credit quality of CMBS per se,” says Clancy.
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