-- Daniel O’Leary
U.S. market players are warning recent heavy trading flows on the synthetic commercial mortgage-backed indexes could be hugely overdone. Certain subordinate senior bonds are now close to par—a first in three years—at the same underlying commercial property prices are expected to drop.
A CMBS trader said buyers are reaching for yield on assets they think are underpriced. But, he said the rally and market were overdone as fundamentals did not add up. “I don’t think we’ve seen the bottom of the commercial property market ....