Moody's: CMBS Issuance May Hit $72B

Issuance of commercial mortgage-backed securities for 2003 could reach $72 billion, according to Moody's Investors Service, making 2003 the second- or third-highest year ever for domestic CMBS issuance.Speaking at a Moody's CMBS conference, Jim Duca, a Moody's managing director and CMBS analyst, said issuance had reached $57 billion as of the third quarter, with about $15 billion in the pipeline. Moody's is seeing more fusion transactions (in which a large deal is included in a CMBS pool) this year, with 65% of Moody's-rated CMBS deals year-to-date falling in this category, compared with 57% of such deals for all of 2002. These deals are becoming more common in the post-9/11 market, Mr. Duca said. Another factor that has aided CMBS issuance this year is historically low interest rates. This is likely to cause some refinance risk, to the extent that interest rates rise, especially for floating-rate mortgage loans of the 2003 vintage, Mr. Duca said.