Property bond issues reach four-year high

 
Michael Bow
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BONDS backed by commercial property in Europe have hit their highest level of issuance since 2009, rating agency Standard & Poor’s said yesterday.

Issues of commercial mortgage backed securities (CMBS) in the six months to June topped €5.4bn (£4.6bn), more than the €3.2bn issued last year.

“Cautious optimism prevails in the European CMBS primary market,” the ratings agency said yesterday. However, it added that it expected limited issuance for the rest of the year, with an estimate of €6.5bn in total for the full year.

“The absence of a normalised commercial real estate lending market could also constrain potential CMBS volumes in the near to medium term,” S&P said.

The next two years are also set to see a spike in the number of CMBS loans maturing in Europe. Just over a third of loans rated by S&P which are maturing this year have defaulted or been repaid at a loss, the figures show. The market will have some way to go before it reaches its past peak of nearly €70bn issued in 2006. Europe accounts for just 8.5 per cent of this year’s total issuance, with the US making up over 90 per cent of issues.