Wall Street Prepares for Commercial Mortgage Bond Slowdown
- JPMorgan has lowered its CMBS issuance forecast by 7%
- SASB sales dropped sharply over the summer as rates rose
Pedestrians walk along Wall Street near the New York Stock Exchange.
Photographer: Michael Nagle/BloombergThe Federal Reserve’s tightening campaign has slowed deal-making activity in commercial real estate markets, leading Wall Street syndicates to forecast a fall in sales of the bonds that securitize the underlying mortgages.
Analysts were expecting a busy year for real estate players. And at first it was: Acquisitions during the first half of 2022 outpaced that of the first half of 2021, in part driven by private equity firms with plenty of dry powder to deploy ahead of the tightening, according to JPMorgan Securities LLC. But rising interest rates have since dampened this enthusiasm, leading the bulge-bracket bank to revise down its CMBS full-year issuance forecast by 7%, to $312 billion from $337 billion.