Asides

CMBS Declines: Speculation or Fundamentals?

By The Prince ⋅ March 3, 2008 ⋅  Email This Post ⋅  Print This Post ⋅ Post a comment

2 Mar 2008 - Despite many professionals and many of his friends in structured finance telling The Prince that CMBS is a completely different animal than residential MBS, it apperars something is afoot.  The Prince must have heard it a thousand times that the fundamentals, financing structures, and incentives in CMBS are more sound than MBS.  Yet, all along Goldman kept telling The Prince to sell CMBS and indices of derivatives linked to CMBS.   Now this article in the WSJ, tells The Prince that GS might have been right.  Yet, did GS’s advice, flying in the face of other analysis like that from DB, cause traders to oversell CMBS when the fundamentals are actually quite strong?  If that is the case then maybe CMBS is a bargain as a long-term investment.