Oct. 24 (Bloomberg) -- Wall Street banks are marketing $2.1 billion in commercial-mortgage bonds amid a surge in sales of the securities as investors seek riskier assets.
Barclays Plc and UBS AG are teaming up to offer $835 million of securities linked to a shopping mall in Las Vegas, according to a person familiar with the offering who asked not to be identified because terms aren’t public. Deutsche Bank AG and Cantor Fitzgerald LP are planning about $1 billion in debt tied to property loans across the U.S., while real-estate investment firm NorthStar Realty Finance Corp. is selling $227.5 million of the debt, the people said.
Issuance is rising as the Federal Reserve’s attempt to stimulate economic growth by holding its benchmark lending rate at almost zero for a fourth year pushes investors toward riskier debt. Banks have arranged $29 billion in bonds backed by shopping malls, skyscrapers and hotels this year, compared with $28 billion in 2011, according to data compiled by Bloomberg. After shutting down in 2008 following a peak of $232 billion in 2007, sales are forecast to reach $45 billion this year, according to Credit Suisse Group AG.
Rising issuance is a boon for landlords with maturing loans. The offering from Barclays and UBS linked to debt on the Fashion Show Mall in Las Vegas is part of a $1.6 billion financing package the lenders arranged for General Growth Properties Inc., people familiar with the loan said. The deal financed five other properties across the U.S., the people said. General Growth is the second-largest U.S. mall operator behind Simon Property Group Inc.
The deal from New York-based NorthStar is composed of debt on 19 properties including so-called transitional buildings, meaning mortgages were taken out on the expectations of higher future income, people familiar with that sale said. The largest loan is $73 million on a shopping center in Buena Park, California.
Top-ranked commercial-mortgage bonds are yielding 104 basis points, or 1.04 percentage points, more than Treasuries, hovering at about the narrowest level since at least January 2008, according to a Barclays index. The spread has declined from 144 basis points on Aug. 31, the index data show.
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