September CMBS Issuance soars amid Fed cuts and investor optimism
Steve Baumgartner, Oct 2024 - 5 min read 
Image source: Image source: Pexels © Patrick Bevan, CC BY 2.0.
Non-Agency CMBS Market Overview
September saw the U.S. Non-agency CMBS market roar back to life after a brief late summer hiatus with over $10.1 billion pricing in the month as lenders, investors and borrowers came together to get deals done.
While capital market participants went into the month feeling optimistic, the Fed going for a full 50 basis points cut was a positive shock that helped September issuance but perhaps more importantly set up more deal-making in Q4. Deal flow in September was strong post Labor Day but accelerated post-Fed cut with more than half of the total issuance occurring in the last week for the month with $5.3 billion pricing.
Source: Commercial Mortgage Alert, Morningstar Credit
Non-Agency CMBS issuance for 2024 is roughly $73.5 billion, far surpassing full-year volumes for 2023 which were just shy of $40 billion.
Single Asset Single Borrower deals continue to lead the way making up more than 2/3rds of the year-to-date flow across 77 deals totaling $49.2 billion. In 2023, the 9-month SASB totals were 22 deals for roughly $12.5 billion so 2024 has seen triple the deals by count and almost 4 times in balance which is certainly driving the markets.
On the conduit front, 2024 is also far ahead of 2023 with 27 deals and $23.5 billion pricing through the first 9 months vs 18 deals and $14 billion through the same period last year.
CRE CLO issuance for 2024 reached $6.7 billion at the end of Q3 after 5 deals were brought to market in the 3rd quarter pushing the year-to-date volume just past full-year issuance for 2023. Of the 9 CRE CLOs issued in 2024, six were managed pools with three static which is the inverse of 2023 which also had nine deals through the first 3 quarters but three were managed and six were static so the market seems to be shifting back to being more comfortable with the managed vehicles.
Source: Commercial Mortgage Alert, Morningstar Credit
Summary
The CMBS securitization markets were strong in September with significant flow across different product types. The surprise 50 basis point cut by the Fed in the month helped September issuance but the impact on volumes will be even more significant in Q4 and beyond. The forward-looking calendar for the rest of 2024 is very robust with good visibility to suggest that non-agency CMBS issuance will easily surpass the $100 billion dollar level which is a significant leap forward and would be only the second time the nine-figure volume for this product was achieved post-global financial crisis.
Source: Commercial Mortgage Alert, Morningstar Credit
