Commercial mortgage-backed securities issuance fell to the lowest level in more than a decade. But the performance of loans backing the securities is holding up.
CMBS volume was a little more than $12 billion during the first half of 2008, Moody's Investors Service reported today. Issuance was down from around $93 billion in the prior half and $137 billion during the first half of 2007.
The ratings agency noted that this was the slowest first half since 1996.
With weak pipeline for new deals, Moody's projected that lower issuance volume is likely for the remainder of the year.
In February, Moody's had forecast 2008 CMBS volume of $35 billion. But the latest figures suggest even that number was overly optimistic.
The New York-based agency expects any revival is one to two years off.
"While it will be a very long time before we see annual issuance volumes in excess of $200 billion again, most market participants continue to believe the portfolio lenders will not be able to absorb the financial needs of the commercial real estate industry and the capital markets will continue to play a role," Managing Director Jim Duca said in the announcement.
Delinquency, however, is mostly remaining in check.
On all conduit and fusion loans backing CMBS over the past 10 years, delinquency of at least 69 days was 0.45 percent on June 30, just 1 basis point higher than on May 31 and 23 BPS higher than the low of 0.22 percent reached in July 2007.