Lehman, UBS Lower Yield Spreads on $1 Billion CMBS

Reuters (04/18/08) ; Yoon, Al
In a rare sign of market stability, Lehman Brothers Holdings Inc and UBS Securities this week lowered some yields on $1 billion of commercial mortgage-backed securities (CMBS)--a move that may mark the first CMBS of the year to price at yields lower than those initially pitched. Previous issues have been sweetened with extra yield to entice those investors left jittery by the credit crisis and worried that commercial properties would fall in value during a recession. CMBS recorded their worst returns ever during February, as investors increased bets against the debt of office towers, retail stores, hotels and apartment communities. Thomas Sherlock, a senior managing director at Buchanan Street Partners, stated, "Right now, the opportunity is in the debt" rather than the properties.