Losses Pile Up in Top-Rated Bonds Backed by Commercial Real Estate Debt
- Top bonds backed by loan for 1740 Broadway in NYC repaid 74%
- Industry analysts warn of more pain to come in safest CMBS
An office building at 1740 Broadway in New York.
Photographer: Michael Nagle/BloombergFor the first time since the financial crisis, investors in top-rated bonds backed by commercial real estate debt are getting hit with losses.
Buyers of the AAA portion of a $308 million note backed by the mortgage on the 1740 Broadway building in midtown Manhattan got less than three-quarters of their original investment back earlier this month after the loan was sold at a steep discount. It’s the first such loss of the post-crisis era, according to Barclays Plc. All five groups of lower ranking creditors were wiped out.