Cerberus Is Repackaging Near-Junk CMBS Into Top-Rated Securities
- The firm has bundled BBB- paper into AAA rated securities
- Some investors consider $390 million transaction to be a CDO
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Wall Street’s alchemists are at it again, this time spinning supposedly safe investments out of the pandemic-stricken market in commercial real estate.
In a maneuver that recalls the complex home mortgage investments in the mid-2000s, Cerberus Capital Management has used relatively low-quality commercial mortgage bonds to create triple-A debt. Although the investment firm didn’t invent these securities, it’s selling them at a moment when the property market is being clobbered by the pandemic.