Today's CMBX Credit Problem

by: John Jansen

There is a credit problem in CMBX which has led to a significant widening of spreads in that sector.Spreads are wider by 6 basis points to 8 basis points in AAA space and about 35 basis points wider in AA space.It gets very ugly in A and BBB space as that stuff is out 75 basis points.

The loan in question is a $225 million dollar loan on which the borrower walked away with a $44.6 million cash take out.

The building in question is rent stabilized and the premise of the loan was that a very large portion of tenants would shift to market rates. That has not happened and the loan is on the verge of default.

Here is a link to a WSJ article about the story.

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