Summer slowdown hits August 2024 issuance, but pipeline strong
Steve Baumgartner, Sep 2024 - 2 min read 
Image source: Unsplash, © Nicolai Berntsen, CC BY 2.0.
Non-Agency CMBS Market Overview
Nonagency CMBS issuance volumes slowed in August as investors, traders, and markets, in general, took a break and headed to the beach before the summer ended. The total volume for the month came in just under $8 billion in nonagency issuance across 4 conduit and 9 SASB transactions. The bulk of the flow came to market in early August with only two conduits and 1 SASB deal in the latter part of the month before the last week of the month to catch its breath.
The primary market continued to see strong demand for paper with strong interest from investors and continued spread tightening across the capital stack.
Source: Commercial Mortgage Alert, Morningstar Credit
Nonagency CMBS issuance for 2024 now exceeds $65 billion which is more than double full-year 2023 numbers. While much of this has been in the SASB space it is important to note that 2024 conduit issuance hit over $20 billion by the end of August which also surpasses the full-year totals for 2023 which clocked in at $19.7 billion total.
The expectation is that September will be an exceptionally busy month as the forward-looking pipeline is strong and issuers look to place as much paper as they can before the quarter’s end.
The highly anticipated move by the FOMC to begin cutting rates is expected to start at the September meeting on the 17th and 18th. For most market participants this is not a question of if the Fed will cut but how big of a cut they will do and what is signaled about what is to come that is the bigger question investors will be looking for.
Summary
While August’s overall issuance numbers dipped a bit it was not unexpected as it is normally slower due to vacations and people capitalizing on the late summer slowdown to take a breather. The strength of the September pipeline shows the primary markets primed for a robust month. Looking further out, the anticipated move by the FOMC to cut rates starting in September has many market participants feeling that Q4 of 2024 could be the strongest quarter of the year.
