Goldman Sachs and Citigroup to sell portfolio of CMBS

30 July 2010

Goldman Sachs and Citigroup are planning to sell a portfolio of commercial mortgage backed securities (CMBS) worth $788.5 million.

According to reports, it is the sixth issue of its kind since the market for CMBS restarted during December of last year and the fourth of 2010.

A term sheet for the sale, which was seen by Reuters, stipulates that a price for the bonds will be drawn up shortly.

Paul Norris, head of structured products and a senior portfolio manager at Dwight Asset Management, told the news provider: “The deal looks like it's going to come pretty tight, but that looks well-deserved.”

Up to 48 mortgages are thought to be behind the issue with almost 80 per cent involving retail properties including New York City's 660 Madison Avenue, a building which is estimated to be worth almost $100 million.

Reuters reported that this latest CMBS will go on sale to investors with an average loan-to-value ratio of 53.7 per cent.

Meanwhile, recently released documents showed that the Goldman Sachs Group relied on financial institutions, including Citigroup, for protection in case of the failure of American International Group.

The information was revealed to the Financial Crisis Inquiry Commission as part of its investigation into the reasons behind the global credit crisis.

By Jim Ottewill

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