Left out of Fed action, lower-rated CMBS overheat

BBB yield-to-worst spirals as highly-rated bonds recover after central bank and government intervention

The Federal Reserve purchased $5.5 billion of agency commercial mortgage-backed securities (CMBS) over the 11 days to April 7, helping rein in runaway yields on the structured products. But the central bank’s refusal to buy private label securities has caused those flirting with junk status to rapidly lose value.

In March, yields on CMBS issued by Fannie Mae, Freddie Mac and Ginnie Mae surged upwards in tandem with non-agency securities as the coronavirus crisis raged, Bloomberg Barclays CMBS

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