Brian Kelly

S&P Lowers Insurers Ratings, What About Banks' $400B CMBS Losses?

Rocknbob,

CMBS issuance did not increase during this period, it declined. In fact it has totally seized up. I suspect this is the reason commercial banks still hold so many commercial mortgages - there is no securitization market to sell the mortgages into.


On Feb 27 07:01 AM Rocknbob wrote:

> Mr. Kelly,
> Correct me if Im wrong , your first graph shows almost constant CMBS
> ownership/distribution from Q107 thru Q308. If thats true, then you're
> assuming the net # of CMBS issued increased during the time.
>
> your statement "The chart illustrates that commercial banks have
> not only been the largest holders of commercial mortgages, but they
> have been increasing their exposure even during the economic crisis."
> indicates this.
>
> Maybe you could indicate whether the absolute amount of CMBS issued
> increased.

CMBS Delinquencies Rise: Should the Government Step In?

Both dq rates came from Federal reserve data and yes the CRE number does include construction loans---Deutsche Bank estimates CMBS dq's rose to 1.2% - including 30 days past due - Foresight Analytics reported dq's on CRE loans on banks books of 2.2%.

online.wsj.com/article...

So when you remove the construction loans the dq rate on CRE is lower than the Fed's number, but still increasing. As you point out, without the gently hand of Uncle Sam there will be problems.





On Jan 10 12:02 AM CMBS wrote:

> Your resi dq numbers look too low and CRE dq numbers look too high.
> Check your data source: does the CRE dq include condo construction
> loans? I think that it is the case.
> Your definition on the cost of insuring CMBS is wrong. Please refer
> to markit.com.
> But you made a valid point that there will be issues, especially
> if the gov. rescue a few asset classes but not CRE. CRE will become
> the victim of gov. intervention. Since the gov. has started playing
> God, the love should be spared with the CRE sector as well.