As the commercial mortgage-backed securities market has grown in the past year some observers have raised concerns that risks are not being adequately priced and that the broader uptake of CMBS – including in collateralized debt obligation tranches – could prove hazardous. Most bankers dismiss such suggestions as nonsense.
“We have not yet been through a full cycle so it’s impossible to know exactly how CMBS will perform,” says Arvind Bajaj, head of the European real estate finance and securitization group at Credit Suisse First Boston in London.
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