Fed Receives $1.5 Billion In TALF Loan Requests For CMBS
November 17 2009 - 6:10PM
Dow Jones News
The Federal Reserve received just under $1.5 billion in loan
requests from investors to buy commercial mortgage bonds under the
Term Asset-Backed Securities Loan Facility, or TALF, according to
data released Tuesday.
This is part of the central bank's efforts to jump-start the
dormant commercial mortgage realm.
For the first time, the program has included a new commercial
mortgage bond. A $400 million deal from Developers Diversified
Realty Corp. (DDR) is said to have drawn a mix of TALF and non-TALF
investors, who didn't tap the Fed's program for cheap loans.
The program also allows for the purchase of existing securities.
The Fed has announced a rate of 2.72% on a fixed, three-year loan
and 3.5427% on a five-year loan.
The central bank reserves the right to use its discretion in
awarding these loans requests, and not all securities that satisfy
its terms may qualify for the loan. Last time, the Fed unexpectedly
rejected five securities without any explanations. This threw
investors and market participants into a tizzy, and is likely to
affect participation this time.
Projections estimated that the Fed would receive $1.7 billion in
requests. It actually received $1.42 billion in so-called legacy
requests for existing CMBS, and $72.2 million for new CMBS.
The TALF program hasn't been as effective in the commercial
mortgages as it has been with asset-backed securities. To give
banks more time to put together new deals, the Fed extended the
TALF program to June 30, 2010, for newly issued CMBS and to March
31, 2010, for all other TALF-eligible bonds. The program was
initially set to expire at the end of this year.
The Fed will announce the closing, and its acceptance of these
loans on Nov. 25.
-By Prabha Natarajan, Dow Jones Newswires; 212-416-2468;
prabha.natarajan@dowjones.com
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