The commercial-mortgage bonds rated Baa3 by Moody’s Investors Service and BBB- by Fitch Ratings, the lowest investment-grade rankings, priced to yield 310 basis points more than the benchmark swap rate, according to a person familiar with the offering, who declined to be identified because terms aren’t public. The refinancing also includes $452.8 million of senior tax-exempt Liberty bonds that were not offered with today’s transaction, the person said.
The CMBS deal comprises debt against the 52-story tower in downtown Manhattan constructed in 2006, according to Moody’s. The property is 95.2 percent leased to 28 tenants, the rating company said in a report. The largest tenant is Moody’s, accounting for 38.7 of the available space, according to Fitch.
The tower was built to replace a building destroyed in the Sept. 11, 2001, terrorist attacks.
The offering is different from more common commercial- mortgage backed securities deals in that it is less diversified than those that bundle loans from multiple borrowers on as many as 100 properties.
Bank forecasts for commercial-mortgage bond sales in 2012 range from Wells Fargo & Co.’s $25 billion to Credit Suisse Group AG’s projection of as much as $45 billion. About $4 billion has been issued this year, according to data compiled by Bloomberg.
Wall Street banks arranged about $28 billion of commercial- mortgage backed securities last year, compared with $11.5 billion in 2010. Rising sales are a boon for property owners with loans coming due. Borrowers have $51 billion of mortgages packed into bonds maturing this year, according to Bank of America Merrill Lynch data.
Relative yields on top-ranked commercial-mortgage bonds have plunged to 181 basis points more than Treasuries, the lowest since May, according to the Barclays Capital CMBS Aaa Super Duper Index. That’s down from a high of 323 basis points on Oct. 4, at the height of the European sovereign-debt crisis. A basis point is 0.01 percentage point.
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