Slowly but certainly, the wounds that hurt the market for more than 4 years now seem to have healed, and there are signs of revival of activity. Whether the sub-performing CMBS deal placed by RBS is an example of the revival of the market, or a part of the continuing efforts of RBS to clean up its balance sheet, remains to be seen, but sure enough, investors are daring to lump pieces of complex securitisation transactions that they have stayed away for all these years.
The latest CMBS deal by RBS was sized GBP 463.2 million, and is backed by sub-performing commercial property loans of GBP 1.25 billion, nearly thrice the size of the securities. There is an AAA tranche that was sold at 255 bps, and an AA tranche sold at 425 bps. The C tranche was retained by the issuer. The deal was rated by S&P.
Earlier, in September, Deutsche Bank had brought a Euro 754 million deal called Flore 2012 by Vitus Immobilien German multi-family agency.
S&P's CMBS journals continue to indicate that nearly 2/3rds of CMBS loans maturing in 2012 are likely to default. However, researchers have given positive indications of the European CMBS market- see, for example, Credit Suisse analysis on the prospects of the market.
[Reported by: Vinod Kothari]