Bloomberg News

Cantor Fitzgerald Boosts Yields on Commercial-Mortgage Debt

December 06, 2011

Dec. 6 -- Cantor Fitzgerald LP increased the yield on portions of $774 million of commercial-mortgage bonds it’s marketing, according to a person familiar with the transaction.

The firm may sell top-ranked commercial-mortgage bonds maturing in about 10 years to yield as much as 150 basis points more than the benchmark swap rate, after initially offering the debt to pay a spread between 140 and 145, said the person, who declined to be identified because terms aren’t public.

Wall Street banks arranged about $27.2 billion in bonds linked to hotel, skyscraper and shopping malls this year, compared with $11.5 billion in 2010, according to data compiled by Bloomberg. Sales plummeted from a record $232 billion in 2007.

A slowdown in the U.S. economic recovery and Europe’s sovereign debt crisis has roiled credit markets in the past five months, making it harder for banks to gauge how much cash they will get from future bond sales. About 15 percent of the loans in Cantor’s deal were acquired from a defunct unit of Credit Suisse Group AG.

The extra yield investors demand to own top-ranked commercial-mortgage bonds rather than Treasuries declined 11 basis points last week to 277 basis points, according to the Barclays Capital CMBS AAA Super Duper Index. The spread was as wide as 323 basis points, or 3.23 percentage points, on Oct. 18 from 209 basis points on July 1.

--Editors: Pierre Paulden, John Parry

To contact the reporter on this story: Sarah Mulholland in New York at smulholland3@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net


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