Oil prices slumped, causing a sell-off in equities and some riskier assets, spurring a flight to quality. The 10 year T yield dropped to 1.87%, a rally of nearly 10 bps. CMBS: Last week saw the tide finally turn. A new pool priced 10 year AAA’s a Swaps + 135 after recent pools had seen spreads blow out to Swap + 175. But bondholders and B piece buyers remain ultra-vigilant on underwriting and structure. The new pools that are pricing contain as much “very vanilla collateral” as possible, based on more conservative underwriting. The subordinate tranches (BBB especially) are still pricing wide. Several originators have tightened their pricing by about 25 bps. Stay Tuned. David R. Pascale, Jr.
