JPMorgan Chase & Co. : J.P. Morgan CMBS Reflects Investors' Demand for Short-Term Debt
06/22/2012| 02:29pm US/Eastern
By Al Yoon
J.P. Morgan Chase & Co. (JPM) priced $1 billion in commercial mortgage-backed securities after shifting yield spread premiums to reflect investor preference for shorter-term bonds to longer-term debt, according to an investor familiar with the deal.
The dealer raised yield spreads on the deal's benchmark 10-year fixed-rate class by 5 basis points from unofficial price guidance to 150 basis points over interest-rate swap rates, according to the investor. The class was also reduced from $437 million to $347 million.
Demand has thinned for 10-year CMBS in recent weeks. Interest rates have fallen so low that many investors believe they are no longer being compensated for the risk of being locked into the securities for the long term, analysts said.
J.P. Morgan lowered yields by 5 basis points on the two- to seven-year senior debt, meantime. It sold additional bonds in a private offering, which included a floating-rate class that appeals to investors seeking less duration.
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