Salient to Investors:
Royal Bank of Scotland said sales of CDOs linked to property are poised to climb to as much as $10 billion in 2013, 10 times the level of 2012 as investors wager on a real estate recovery and the Fed pushes down borrowing costs. Richard Hill at RBS said the deals could help borrowers under water who otherwise are unable to refinance. Shrinking yields on CMBS are pushing investors to look for higher-yielding assets, and CRE CDOs are the next frontier.
Ed Shugrue at Talmage said Wall Street is scouring the cupboards to find anything with a cash flow that can be securitized.
Tad Philipp at Moody’s said that CDO was the umbrella term for everything during the boom, but not now.
Keerthi Raghavan and Aaron Haan at Barclays said money managers have contributed to increased trading and a sharp tightening in spreads, while cash inflows into fixed income funds have remained elevated over the last year – despite the significant tightening, CMBS remains attractive compared with similarly rated assets, such as corporates.
The Moody’s/RCA Commercial Property Price index has risen 27.7 percent since bottoming in November 2009.
Read the full article at http://www.bloomberg.com/news/2013-01-14/wall-street-returns-to-property-cdos-in-yield-hunt.html.