Deutsche Bank (DB) AG is planning a commercial-mortgage bond deal for February of about $1 billion as Wall Street seeks to reignite sales after the European debt crisis roiled markets and damped lending.
The offering will be the second deal of its kind in 2012, according to people familiar with the transaction, who declined to be identified because the issue hasn’t been announced. The Frankfurt-based lender last sold similar debt in a $1.65 billion offering in August, according to data compiled by Bloomberg.
Sales of securities tied to everything from shopping malls to mobile-home parks fell to $2.87 billion in the fourth quarter of 2011 from $8.26 billion in the previous three months, Bloomberg data show. It takes several months to pool loans to package for sales, and banks are wary of holding the debt on their books when volatility surges.
Originations have picked up since the slowdown, with Goldman Sachs Group Inc. and Citigroup Inc. teaming up to sell $1.15 billion in commercial-mortgage backed securities last week. Banks are arranging as much as $11 billion in new sales through April, according to Commercial Mortgage Alert, an industry newsletter.
While banks have stepped up originating new loans for sale as bonds, Wall Street remains unable to compete with the low rates offered on the best properties by insurance companies and other lenders, according to a Jan. 29 report from Bank of America Merrill Lynch.
‘Build a Pipeline’
“Lenders will have to originate many more, smaller loans to build a pipeline large enough to securitize,” wrote Alan Todd, a New York-based analyst at the firm.
Bank forecasts for commercial-mortgage bond sales in 2012 range from Wells Fargo & Co.’s prediction of $25 billion to UBS AG’s and Credit Suisse Group AG’s estimates of as much as $45 billion.
Wall Street banks arranged about $28 billion of the debt last year, compared with $11.5 billion in 2010, Bloomberg data show. Issuance peaked at $232 billion in 2007, the data show.
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