Deutsche Bank and Citigroup have teamed up to offer a new US $975m CMBS they hope will satisfy new risk-retention rules that take effect next month, two sources told IFR. The banks plan to keep at least 5% of each class of the securitisation, from the top Triple A tranche to the bottom unrated notes, the sources said.
The so-called vertical strip is one way that commercial mortgage bond issuers hope to comply with new rules aimed at making sure they are sharing risk with their investors.
The two banks plan to serve as the deal's initial risk retention consultation parties, according to deal documents filed with the Securities and Exchange Commission.
Consultation parties, a new feature in some CMBS deals, aim to reassure bond buyers that their interests will be better represented if and when any underlying loans go sour.