- The Fed voted to reduce the pace of its monthly bond purchase program by $10B to $55B and said interest rates increases would likely start six months after the monthly bond-buying program ends. As a result, 5yr UST rates increased about 20 bps last month and the difference between the yields on 5yr and 30yr bonds narrowed to the least since 2009 on bets the Fed end stimulus and raises interest rates sooner than forecasted as the economy strengthens.
- Preqin reported that real estate funds have an unprecedented $110 billion of “dry powder” targeting North American investments. This committed equity available amount is up 4% from the end of 2013 and up 24% from the end of 2012. North American real estate funds that closed their marketing efforts in 2013 were on the market for an average of 15.4 months compared to 18.8 months of average marketing time for funds that closed a year earlier.
- CMBS new issuance spreads have been stable to slightly tighter since the beginning of the year. Super-senior bonds on the last couple of deals have been inside of 90 bps with a range over the last four months of 87 – 95 bps. The BBB- classes have also remained stable in the S + 345 – 395 range. With that said, we have seen CMBS spreads to borrowers trending down indicating that originators continue to price in less profit.
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