The top-ranked securities maturing in 9.69 years will probably price to yield 120 basis points more than the benchmark swap rate, according to people familiar with the offering who declined to be identified because terms aren’t public. The banks had marketed the debt to pay a spread of 115 basis points, in line with similar debt sold by JPMorgan Chase & Co. earlier this month, the people said. Today’s sale marks the widest spread since Goldman Sachs Group Inc. and Citigroup Inc. sold similar securities in January.
Landlords are borrowing more against their properties in commercial-mortgage bond deals planned through June, according to Moody’s Investors Service. Transactions slated to be marketed during the second quarter include pools with average loan sizes approaching or exceeding the value of the buildings as calculated by Moody’s, the New York-based ratings company said in an April 16 report. Banks may have to boost investor protections if underwriting standards slide, Moody’s said.
About $5 billion of the debt has been sold this year, compared with a record $232.5 billion in 2007, according to data compiled by Bloomberg. Banks arranged about $28 billion of commercial-mortgage securities last year, up from $11.5 billion in 2010, Bloomberg data show. Sales are picking up after slowing in the fourth quarter as market volatility crimped new lending.
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