BofA CMBS Weekly 6 is the new 5 higher Treasury yields weigh on issuance and refinance success 2026 10 09

CMBS Weekly 6% is the new 5%: higher Treasury yields weigh on issuance and refinance success

09 October 2026 Key takeaways Securitized Products Strategy • Remain neutral, but increasingly selective. Favor floating over fixed securities. Focus United States on high quality SASB and CRE CLO. • Fixed-rate issuance fades through higher yields, floater issuance relatively strong Alan Todd, CFA CMBS Strategist despite rate volatility. BofAS • Higher interest rates likely to impact CMBS spreads, and loan refi-ability, transaction volume, and price appreciation. Nick O'Brien CMBS Strategist BofAS Spreads leak wider but remain relatively resilient CMBS spreads held in relatively well this week, although pockets of weakness emerged in the private label and Agency CMBS markets. Although CMBS at-large has outperformed the corporate market, we view spreads as increasingly susceptible to leaking wider while investors interpret “Fed-speak” and contemplate just how high Treasury yields may go. With rate hike expectations paring off despite continued oil Exhibit 1: Private label and Agency market volatility and uncertainty, the Treasury market is at the forefront of everyone’s CMBS benchmark spreads Spreads were wider across nearly all mind and where it may go. products on the week Floating rate issuance surges, fixed rate slows On-the-run Conduit bond spreads to The trend toward floating-rate debt has become increasingly pronounced as higher Treasury 10/8 WTD MTD YTD Min Max Treasury yields make fixed-rate financing prohibitively expensive for many borrowers. A1 (3yr) A2 (5yr) Floating-rate structures generally provide greater loan proceeds, making them an A-SB increasingly attractive refinancing option for sponsors facing upcoming maturities. As a LCF AAA (5YR) LCF AAA (10YR) result, we expect conduit issuance will remain somewhat subdued until there is a A-S material shift in the inflation outlook or a meaningful change in expectations for Federal AA A Reserve policy. In the meantime, we continue to favor highly-rated, high-quality floating- BBB- rate products from a relative-value perspective. Zero-duration exposure, attractive carry, Benchmark Agency CMBS spreads to Treasury 10/9.5 TBA and the potential benefit of higher reference rates in a prolonged hiking cycle provide a GeMS A compelling combination in the current market environment. GeMS A Freddie K A

Examining metrics for loans that refi’d, and that didn’t Freddie K A2 GNR PL This week, we dug more deeply into SASB and conduit performance metrics for loans SBA SBA that matured year-to-date to determine if we could glean any information regarding SBA what is required for a loan to refinance successfully. The wide gap in performance CRE CLO spreads to SOFR AAA metrics between paid-off and outstanding conduit loans highlights lenders’ scrutiny of AS collateral. Sponsors of Class B and Class C properties continue to face greater difficulty AA A refinancing, particularly when the assets have not generated meaningful cash-flow BBB growth. We expect this divide will persist, and potentially grow, in an elevated-rate BBB- Fixed rate CMBS Data Center spread to Treasury environment. AAA 180 5 5 NA 149 180 A 275 10 10 NA 220 275

Hotel sector, rating actions, & issuance BBB 410 10 Source: BofA Global Research 10 NA 370 410

Finally, we provide our usual updates on the hotel sector, rating actions, and issuance. BofA GLOBAL RESEARCH For convenience, please find our CMBS spread time series here.

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Recap and relative value This week marked another tumultuous period in the rates markets as investor…