Regional Bank Pullback Exposes Widest Spreads In Years on Commercial Mortgage Bonds
- CMBS are getting hit by fears about refinancing mortgages
- Market’s priced for worse scenario than 2008 crisis, GMO says
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Bonds tied to commercial mortgages are getting punished as money managers fret that US regional bank blowups will cut the availability of credit, but investors including GMO say there are good bargains available to those willing to carefully vet the securities.
Risk premiums, or spreads, on the highest-rated commercial mortgage bonds averaged about 1.12 percentage point as of Thursday’s close. That’s close to the widest since the early part of the pandemic and before then, near the highest level since 2016.