Recovery
Ratings risk
Patience wanes
Agressive -Post collateral, liquidate,
Duration
Investors
Goldilox deals
Insurance
mutual fund
Alliance Bernsteil
TALF CLO Static
CLO NI deals rolling out
Economics CLO equity huge
Free equity
Secondary trends
Buyers waiting
Opportunity funds
Cash sell-off
2-types seller--
forced sellers
raising cash-- recovery
YoY
Empirasign data, orderly flow
de-risk
impairment--
ratings
CMBS NI recovery
Questions
Profit
Risk
SFR Progressive
Single Family Rental, AAA 10x oversold
Progress Residential Trust (PROG) 2020-SFR2
TALF
Jawbone
SASB - liability
30% enhancement
NI TALF 1 not popular
CMBX
Big Short 2 - Canyon Partners 3/2019
Popular BBB
short cover
CMBS WH loans
Rating pressure, fixed costs, losses expand
Subtopic
Overtime harder to play nice forbearance runsout
Ratings, not wait until vaccine, Dec. turnaround, 1Q
Huge bargains at the high risk level of subs
Investors benefit stronger deals, harder to sell
New origination closed impact borrowers into 3Q''
12-15bn
balance sheet liability
Losses
Don't want to own it, best interest to show flex
hedges
Term exit option?
Borrower flex
Why care
Purchases
Retail
Offices
Co's depend on CMBS (CRE Lending)?
Borrowers, impacted by the frozen origination market
CMBS Conduit NI
Need to improve deals to grab investors
Not an investor problem like 2008
Uncertainty problem
Get back to work, value, some clairity
GS, DB Oversubscribed deals
4-5 more pipeline 700mm
WFCMT 2020-56
partener deal
Sized reduce from $2bn
Workouts
Transitional loans not for b/s
Borrower stress severe
Cover-Clean Portfolio
NEW-New issue hiatus 5-6mth BoA
Top of the story
3Q lull, until origination returns
2 issues blocking deals flow -- cleaning out old business and predictability on asset valuation
