Wall Street Journal (04/23/08) P. C12; Forsyth, Jennifer S.; Karp, Jonathan; Hudson, Kris
Action on the CMBX, a credit-market index that has had a major influence on commercial mortgage-backed securities prices since its debut two years ago, is enervating CMBS investors and issuers. Recently rebounding from trading levels that suggested soaring default rates on the underlying commercial loans, the index has been performing much better since late March. The difference between the benchmark Treasury notes and highest-rated CMBX narrowed significantly, which subsequently inflated the prices on actual bonds. The index is now oversold. "I see the rally as something that should have been expected given how far out of whack CMBX spreads had gotten versus stable commercial real-estate fundamentals," said Darrell Wheeler, global head of securitized strategy at Citigroup Inc.
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