What are US commercial mortgage-backed securities?

Today’s US CMBS market is an important sector in the global fixed income market

Mar 16, 2018 | Kevin Collins and Daniel Saylor

US commercial mortgage-backed securities (US CMBS) are bonds collateralized by commercial real estate loans which are, in turn, secured by commercial real estate. The cash flow from the commercial mortgage loans is used to service the interest and repay the principal on the bonds.

Why consider US CMBS?

A CMBS strategy can provide focused exposure to commercial real estate loans or help diversify an overall fixed income portfolio. We believe interesting opportunities currently exist in US CMBS due to strong US commercial real estate fundamentals and a growing number of US commercial real estate loans that will need to be refinanced. Further, US CMBS may provide attractive incremental yield relative to the US corporate bond market.

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