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  • normlasky normlasky Sep 28, 2011 4:36 PM Flag

    Kelly King on CNBC!

    King said that margins on their c&i loans had increased 100 to 125 bsp since late 2008. C&i loans comprised about 1/3 of bbt loan portfolio. I think this is largely due to the big money banks pulling back from their low ball pricing pre Lehman.

    Read this week that jpm is having trouble unloading some of their cmbs. Investors want higher yields on the lower cmbs tranches so jpm may have to continue to raise price on their cre loans which is good for bbt.

    I'm praying that King sold off most of their $23 billion mbs gse portfolio yielding 90 bsp. I rather have him keep the $23 billion at the Fed earning 25 bsp waiting for opportunities vs. taking on the interest rate risk. Heck, he could take around $4 billion of the $23 billion -invest it in triple A munis and keep $19 billion in excess reserve at the Fed and still earn 90 bsp.

    It would be very nice for shareholders to realize $500 million plus gain on the sale of their mbs gse stuff. Close to $1 share. Time to stick it to cramer, the neanderthal man, and all the other anti-bbt guys.

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    • Investors always want more yield. The issue with CMBS pricing right now is not the yields or collateral value, but the ratings from S&P. That's why GS pulled their deal last month. We can say that higher spreads will be good for the banks, which is true, but its not good if there are no net transactions. The GS deal in August was going to be great for the market...big issuer with very tight spreads and low loan rates, and the investors were there ready to buy it. That deal was going to set the market for the next few quarters and drive up loan demand, spur the economy, etc. etc. But now the market is frozen again. S&P is now doing what they should have done five years ago, but just as they missed the boat then, now they are going too far in the other direction, trying to salvage their reputations.

      • 1 Reply to nobankersplease
      • My understanding is that investors are goosey with the tail end of the capital structure of cmbs as a result of the "soft patch". Your s&p comment is news to me but it is certainly not surpriseing given the excellence of that organization.

        Imo, bbt ought to buy some AAA rated cmbs especially with raising commercial property values in many parts of the country. The yield is 3.8%, about 4 times what bbt is earning on their mbs gse stuff. Also, I think the cmbs stuff is much less risky than mbs gse.

        JPM did sell their cmbs but it took much longer than normal and they probably had to cut prices some to induce investors. CMBS volume in the 3rd qtr is projected at about $10 billion, much stronger than the first half. But the 4th qtr. cmbs business looks weak.

        Are you sure GS pulled their cmbs or did they let some of it go. They should have had no problem moving the upper capital tranches at good prices.

 
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