Developers Diversified Realty Corp. sold $400 million worth of of debt backed by shopping centers backed by 28 malls in 19 states. The offering is the first to use the Federal Reserve’s Term Asset-Backed Securities Loan Facility since it was opened to the debt in June.
Investors can take out loans from the TALF to purchase the AAA portion of the bond sale, enabling them to boost returns with borrowed cash. TALF was started in March to revive the market for asset backed securities.
The $323.5 million AAA-rated portion of the DDR offering was priced to yield 140 basis points more than benchmark swap rates. Investor demand allowed the company to reduce the spread from as much as 175 basis points.
References:
- Developers Diversified Sells Commercial Mortgage Debt By Sarah Mulholland for Bloomberg
- It’s Alive: Commercial Mortgage-Backed Securities Market Stirs A Little from Dealbreaker
- Term Asset-Backed Securities Loan Facility: Frequently Asked Questions from the Federal Reserve Bank of New York