- What One more CMBS deal likely would boost annual volume in Canada to the highest level in more than a decade
- Why Market for lending could be picking up
- What next The buzz is RBC has begun aggregating loans for a securitization slated to price by yearend
RBC is telling market pros that it plans to print a second CMBS deal this year, which would push Canadian issuance volume to its highest tally since 2013, Green Street News can reveal.
Details were scant, but the bank’s deal would almost assuredly tally several hundred millions of dollars, typically viewed as the minimum size to make the process worthwhile. To date this year, two deals have priced with a total balance of $803.3m, according to sister publication Commercial Mortgage Alert’s CMBS Database.
Issuance last year totaled $990m across three deals, but hasn’t crossed the $1bn threshold since hitting $1.54bn in 2013.
While market conditions could change and push back RBC’s plans, the lender already is aggregating loans for the planned issuance. Since the start of 2016, it has been lead or joint bookrunner on all 16 Canadian CMBS deals that have priced.
Canadian CMBS issuance crossed the $1bn threshold every year from 2001 to 2007, but the global financial crisis that followed mostly shuttered the market. Just eight deals priced between 2017 and 2022.
One headwind for bankers is a pricing premium demanded by bondholders due to the small size and relative illiquidity of the Canadian market. Those buyers expect higher yields throughout the capital stack, which means the underlying loans require higher coupons – and a longer time to line up borrowers agreeing to those terms.
That said, the overall market for Canadian CMBS has been on an upswing. Since the start of last year, five deals totaling $1.79bn have priced. In the prior four years combined, five deals priced with an aggregate value of $1.72bn.
The two deals already printed this year in Canada are REALT 2025-1 and BX 2025-PURE2. RBC, the sole bookrunner, contributed 84% of the loans in the former deal, with Bank of Montreal supplying the rest. In PURE2, Citigroup, RBC and BMO served as joint bookrunners.
