CMBS Weekly: CREFC Recap: neither particularly bearish nor bullish, but cash must be put to work

Research evidence excerpt

CMBS Weekly: CREFC Recap: neither particularly bearish nor bullish, but cash must be put to work

TD Min Max

CREFC Recap: cash must be put to work A2A1 (5yr)(3yr) 11070 00 00 -17-10 11070 12780

This week we met with clients across the CMBS universe. The key recurring themes LCFA-SBAAA (5YR) 7665 00 0- -10- 7065 8275

centralized around the proliferation of the data center industry, ratings changes for A-SLCF AAA (10YR) 10072 02 02 -15-8 10067 11580

seasoned collateral, particularly in the mezzanine part of the stack, and rising multifamily AA 130 0 0 -20 125 150

delinquency rates. Broadly speaking, investors were neither bullish nor bearish but felt BBB-A 415175 00 00 -50-25 415175 465205

compelled to deploy capital amid steady inflows. Liquidity across lending channels 10/9.5BenchmarkTBA Agency CMBS spreads31to Treasury-2 -2 -14 31 45

remains deep and competitive, supporting issuance despite higher rates, while investors’ GeMSGeMS A2A1 3338 00 00 -9-4 3338 4242

appetite for bonds remains strong, albeit with a growing defensive bias and preference Freddie K A1 36 -1 -1 -10 36 46

for high‑quality, shorter-duration assets. We dissect each of these topics in our CREFC GNRFreddiePL K A2 5428 -30 -30 -18-12 4728 7240

recap. SBA10SBA20 4045 -30 -30 -10-7 4045 4755

SBA25 46 -2 -2 -9 46 55

Hotel sector, rating actions, & issuance CMBXAAA 18 Spreads 38 -1 0 -8 38 73

Finally, we provide our usual updates on the hotel sector, rating actions, and issuance. AAAS 16060 -20 00 -30-2 15659 198129

For convenience, please find our CMBS spread time series here. A 231 -3 6 5 198 273

BBB- 619 -1 20 57 394 648

BB 1139 1 34 89 665 1169

UST closing yields

2YR 4.06 -9 3 59 3.4 5.0

5YR 4.18 -8 2 46 3.4 4.7

10YR 4.46 -7 1 29 3.6 4.8

Source: BofA Global Research

BofA GLOBAL RESEARCH