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Barclays, UBS Lead $2.1 Billion in CMBS Deals as Sales Surge

October 24, 2012

Wall Street banks are marketing $2.1 billion in commercial-mortgage bonds amid a surge in sales of the securities as investors seek riskier assets.

Barclays Plc (BARC) and UBS AG (UBSN) are teaming up to offer $835 million of securities linked to a shopping mall in Las Vegas, according to a person familiar with the offering who asked not to be identified because terms aren’t public. Deutsche Bank AG and Cantor Fitzgerald LP are planning about $1 billion in debt tied to property loans across the U.S., while real-estate investment firm NorthStar Realty Finance Corp. (NRF:US) is selling $227.5 million of the debt, the people said.

Issuance is rising as the Federal Reserve’s attempt to stimulate economic growth by holding its benchmark lending rate at almost zero for a fourth year pushes investors toward riskier debt. Banks have arranged $29 billion in bonds backed by shopping malls, skyscrapers and hotels this year, compared with $28 billion in 2011, according to data compiled by Bloomberg. After shutting down in 2008 following a peak of $232 billion in 2007, sales are forecast to reach $45 billion this year, according to Credit Suisse Group AG.

Rising issuance is a boon for landlords with maturing loans. The offering from Barclays and UBS linked to debt on the Fashion Show Mall in Las Vegas is part of a $1.6 billion financing package the lenders arranged for General Growth Properties Inc. (GGP:US), people familiar with the loan said. The deal financed five other properties across the U.S., the people said. General Growth is the second-largest U.S. mall operator behind Simon Property Group Inc.

NorthStar Offering

The deal from New York-based NorthStar is composed of debt on 19 properties including so-called transitional buildings, meaning mortgages were taken out on the expectations of higher future income, people familiar with that sale said. The largest loan is $73 million on a shopping center in Buena Park, California.

Top-ranked commercial-mortgage bonds are yielding 104 basis points, or 1.04 percentage points, more than Treasuries, hovering at about the narrowest level since at least January 2008, according to a Barclays index. The spread has declined from 144 basis points on Aug. 31, the index data show.

To contact the reporter on this story: Sarah Mulholland in New York at

To contact the editor responsible for this story: Alan Goldstein at

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