

Bank of America Merrill Lynch has sold the first CMBS of 2016, with the AAAs pricing tighter than the bank’s initial guidance.
The bank sold the €141.6 million AAA tranche at a 130 basis points margin over three-month Euribor, which was tighter than its indicative pricing of 140-150 bps released on 7 March.
The European CMBS market has been virtually closed since last autumn, due to volatility in the credit markets and the pricing on this first deal in 2016 was being keenly watched. Other lenders said 130bps for the class As in Taurus 2016-1 DEU was an encouraging sign for the market.
Last September, AAA tranche pricing had widened to 165bps – it had been as low as 90bps six months earlier.
There was reasonable demand for the class As through to the class Ds in Taurus 2016-1 DEU, which is backed by a €333.7 million single loan secured by the German ‘Kingfisher’ portfolio of 55 mainly retail properties owned by Blackstone. These classes were oversubscribed by 1.9 – 1.4 times.
But the junior class E sold a discount of 5 percent and the class F tranche at a 6.8 percent discount.
The final structure was:
CLASS SIZE EXP. RATINGS LTV WAL SPREAD COUPON PRICE
- A €141.6m AAA/Aaa 30.1 4.57 3mE+130 3mE+130 100.00
- B €38.2m AA(hi)/Aa3 38.3 4.57 3mE+240 3mE+240 100.00
- C €25.5m AA(lo)/A3 43.7 4.57 3mE+320 3mE+320 100.00
- D €41.8m BBB/Baa3 52.6 4.57 3mE+400 3mE+400 100.00
- E €52.6m BB/Ba3 63.8 4.57 3mE+550 3mE+425 94.9748
- F €17.35m BB(lo)/B2 67.5 4.57 3mE+675 3mE+500 93.1646
The blended nominal coupon is 264bps but it is 294bps taking account of the discounted junior classes. Costar reported that the margin on the original loan which closed last September was 275bps.
DIY retail accounts for 37 percent of the market value, followed by 21 percent for retail parks, supermarkets at 12 percent, shopping centres at 10 percent and retail warehouses at 2 percent.