Dave Wald的动态

Lost in transition. ?? “The CRE CLO market is the first shoe to drop in terms of defaults in the CRE debt markets.” “The loans inside CRE CLOs tend to be for transitional properties, so the borrowers are counting on reselling them before the loan matures.” “But today many borrowers can’t sell properties for anywhere near where they bought them.” Mark Neely / GenTrust Bloomberg via Yahoo Finance “In just the last seven months the share of troubled assets held by these niche products has surged four-fold, by one measure, to more than 7.4%.” “For the hardest hit, delinquency rates are in the double digits.” “… industry observers say few products are more exposed than CRE CLOs.” “That’s because they’re primarily stuffed full of short-term, floating-rate loans for properties undergoing renovations or expansions, the type of risky debt that banks or CMBS often don’t want to hold.” “That’s left major players in the $80 billion market rushing to rework loans, while short sellers are ramping up attacks on publicly-traded issuers they say may be so beset by missed payments that they have little to no equity value.” “Issuers have been buying time by extending maturities, letting developers pay interest with additional debt, and making other changes to loans to encourage borrowers to keep current.” “Modifications often take the form of two- to three-year extensions, in exchange for which borrowers typically are required to inject more capital.” “Increasingly, CRE CLO issuers are also buying out delinquent loans via cash reserves, allowing them to avoid tripping asset-coverage tests which causes cash-flow streams to certain investors to get turned off — a mechanism designed to protect those who purchase less risky portions of the structures.” “Firms bought back a record $1.3 billion of delinquent loans last year, according to JPMorgan Chase & Co. estimates.” “Increased stress in this market has forced managers to take unprecedented steps to protect the integrity of their CRE CLO structures,” strategists led by Chong Sin wrote in a report last month.” “Market watchers say that may partly explain why the share of loans in CRE CLOs with payments more than 30 days overdue fell to 7.4% last month, based on data from analytics firm CRED iQ? after peaking at more than 8.5% in January.” “Another measure of CRE CLO loan stress from Citi that uses different criteria touched 4.8% in January, the highest in data going back to 2014.” ??????