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| Weekly Interest Rate Tracking |
| January 15, 2008 |
Good Morning,
Attached is a PDF copy of Colliers Meredith & Grew's interest rate sheet that includes current and historical Treasury, LIBOR and Prime interest rates, which are updated daily with real time data from Strategic Alliance Mortgage.
We provide these updates on a weekly basis to keep our clients and colleagues aware of rate movements. We hope you find this information helpful.
DOWNLOAD INTEREST RATE SHEET (200KB)
The following Market Perspective provides insights and commentary on breaking news and emerging trends in commercial real estate finance.
Safe-haven buying, which pushed Treasuries to historic lows at the end of the fourth quarter, has carried over into 2009. Investors, looking to pretty up balance sheets with the very safest and most liquid assets prior to year-end reporting, poured capital into Treasuries and cash equivalents in December. This led to a flattening of the yield curve as inflation was effectively priced out of the U.S. bond market. Treasuries should fall as the U.S. government prepares to flood the market with new debt sales to fund the proposed American Recovery and Reinvestment Plan. The influx of nearly $1 trillion in new debt issuances will likely bring inflation risk back into focus, causing Treasuries to give up their gains and revert to higher yields. Also, safe-haven buying should subside as investors begin to seek out higher yielding (but still very safe) alternative investments. But keep an eye on economic reports. If leading benchmark indicators point to a deepening recession it may scare investors enough to push them back to the (lower yielding) safety of government debt, thereby putting inflation concerns on the back burner. This will be a key trend to monitor in coming months.
Commercial MBS spreads widened to near all-time highs this morning upon mounting concerns that major defaults are looming. Borrowers with maturing debt face a difficult take out market (via refinance or sale) that could lead to widespread defaults. Investors have become more and more concerned with this possibility as the recession deepens, causing many banks and life companies to hoard capital. Spreads on AAA-rated securities surged to 978.5, an 11.3% increase over yesterday's close at 879.25. CMBS spreads will continue to widen out until investors become comfortable with the underlying credit quality of the securities.
Credit Markets Begin to Thaw. The Associated Press reports:
"Credit markets are beginning to thaw after months of a deep freeze. In a promising turn that could bolster the economy, companies are selling bonds at a pace not seen since last spring. At the same time, companies are finding it easier to issue commercial paper, the short-term loans necessary for quick access to cash. Global sales of new corporate debt jumped to $82 billion last week, the highest since $103 billion last May and nearly double the level seen right before the credit crisis intensified in September, according to data-tracker Dealogic."
U.S. Treasuries Little Changed After Price, Jobless Reports.
Bloomberg.com reports:
"Treasuries were little changed as reports showed wholesale prices declined in December for a fifth month and weekly jobless claims swelled. Bonds gained earlier, driving yields on 10-year notes to within 11 basis points of a record low, as signs the recession is deepening stoked demand for the safest assets. Stocks fell on concern the deepening recession will hurt company profits."
ECB Cuts Key Rate as Recession Forces Trichet's Hand. Bloomberg.com reports:
"The European Central Bank cut its benchmark interest rate by half a percentage point to 2 percent, matching a record low, as the deepening recession pressed policy makers into action."
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| Please contact the Capital Markets Group at Colliers Meredith & Grew with any financing questions.
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Colliers Meredith & Grew is a Boston-based commercial real estate company with integrated service groups including Brokerage, Capital Markets, Counseling & Valuation, Development & Advisory, Investment Sales, and Property & Asset Management. In addition to representing its core clients in New England, Colliers Meredith & Grew provides national and international real estate services to its multi-market clients as a member of Colliers International and as an owner/member of Strategic Alliance Mortgage LLC (SAM). Colliers International is a worldwide affiliation of independently owned and operated companies in more than 293 offices in 61 countries. |
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