Investors are stomaching the lowest premium in more than a decade for taking on more risk in the US commercial property market, as a humming American economy encourages money managers to reach for higher returns.
The difference between the return on the safest slices of commercial mortgage-backed securities — a pool of mortgages bundled into a bond — and the riskier slices has dropped to its lowest level since the build-up to the financial crisis, according to data from Trepp, a data analytics company.
A combination of an expanding US economy and the ongoing hunt for yield is driving investors’ willingness to assume more exposure to potential losses without greater compensation. For some it is another sign that a nearly decade-old credit cycle maybe approaching a turning point.
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