Commercial Real Estate Rallies!

We’ve been looking at some absolutely horrific commercial real estate charts lately, so we thought it would only be fair to show that there are some signs of life in this market.

David Goldman passes on a couple of charts from Markit showing that someone out there is making some big bets on the lower-rated (A and AA) commercial real estate tranches, both of which have spiked in recent weeks.

Commercial real estate A

And the AA tranche

Commercial real estate AA

Says Goldman:

The lower-rated tranches of CMBX as well as the underlying bonds are a small and relatively illiquid market dominated by a few specialists, including life insurance companies who own the preponderance of commercial mortgages. Without assigning too much importance to the phenomenon, someone is willing to make aggressive levered bets on commercial real estate.

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