Deutsche Bank is planning to ramp up its participation in the agency commercial mortgage-backed securities market. The bank has brought to market its first transaction, a $283 million sale backed by a pool of 40 Ginnie Mae loans, and is looking to win mandates to lead deals throughout 2005. "Last year it was a $5 billion sector and before then we did not participate in it. If you're an investor in CMBS, you have some [agency CMBS]," said John McGrath, director at Deutsche Bank, explaining why the bank is seeking to raise its profile.
Like traditional corporate CMBS, the agency CMBS is trading at very tight levels but does offer investors some additional yield, McGrath said. For example, the 9.96-year weighted-average life class of the deal it led was priced at 38 basis points over swaps, which he said is about a 13bp discount to traditional CMBS. "There's a little more optionality in the underlying collateral, so it's not apples to apples," he noted. Despite the aggressive plans to distribute deals, McGrath said he has no plans to add professionals. He joined Deutsche Bank last summer from Credit Suisse First Boston.