CBRE Capital Markets eNews

CBRE reported the following today:

Today Bloomberg reports, Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson warned lawmakers that failure to pass a rescue plan to take over troubled assets from financial firms would threaten markets and the U.S. economy. “Action by the Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and for our economy,” Bernanke said in testimony prepared for delivery today to the Senate Banking Committee, “Global financial markets remain under extraordinary stress.” Bernanke and Paulson are pushing Congress to quickly approve a $700 billion plan to remove illiquid assets from the banking system.

Community and regional banks with a sizable amount of construction and land loans on their books are pushing for lawmakers to include them in the $700 billion bailout plan proposed by the federal government. Zelman & Associates says construction and land loans account for 9 percent of all loans at U.S. banks and thrifts, amounting to about $700 billion. Meanwhile, Foresight Analytics LLC reports a jump in construction loan delinquencies to 8.1 percent in the second quarter from 7.2 percent in the first quarter and 2.4 percent a year ago.

Commercial Real Estate Direct reported that spreads for cash CMBS ended last week wide by roughly 50 basis points, after a rollercoaster ride that saw them balloon as much as 100 bps during the week. Today they tightened by as much as 100 bps. Super-senior AAA bonds were quoted last Friday at an average of 325 bps over swaps, up from 277.5 bps over swaps a week earlier. That change, while dramatic in and of itself, belies the massive spread movements during the week.