CMBSs pose a challenge but also produce opportunities

摘要

From 1994 to 2007, the commercial mortgage-backed securities (CMB5) market provided the real estate sector with an important source of funding. Now the CMBS sector is negotiating its way through the impact of severe market value declines, a general lack of liquidity, high loan-to-value loans maturing and financial covenants breaches.For those who are picking through these structures, there are two things to remember.First, on deals with multiple tranches of notes, the most difficult issue is likely to be achieving consensus between those with senior debt and those with junior debt. The senior debt is repaid first but those with junior debt are at the back of the queue and, on a forced sale at today's values, may lose their principal investment. This imbalance will cause disputes.