Cantor to Regroup With Solo CMBS Offering

Cantor Fitzgerald plans to move forward with a solo commercial MBS offering following its split with Wells Fargo.

Cantor, which originally planned to make its CMBS debut next month in a joint $1 billion transaction with Wells, will instead be the sole lead manager and loan contributor for a deal expected to hit the market in April. The transaction would be backed by 40-50 loans with a total balance of $600 million to $700 million, market players said. A Cantor spokeswoman declined to comment.

The plan for a Cantor-Wells collaboration went awry a few weeks ago after comments that a Cantor executive made about the transaction at an industry conference were deemed to run afoul of disclosure regulations for securities deals. Cantor and Wells could have delayed the deal, but decided to scrap it.

Since then, the two banks have regrouped: Cantor will move forward on its own, while Wells is expected to seek out an alternative lending partner. Wells “can make an arrangement with any one of several groups,” said one industry veteran.

Some investors said Cantor, as a new player in the CMBS market, might run a risk by serving as sole lead manager of its transaction, because it will be the only dealer committed to making a market in the bonds. “The investors are going to wonder if Cantor has enough balance sheet to last through the cycle,” said one buysider. “Will Cantor make a market in this paper three or four years from now? That's the question.”

Cantor is expected to bring in co-managers for the transaction.

Cantor decided to make a big push into the CMBS sector last year. It hired four former Credit Suisse executives to oversee the move and has since amassed a large origination staff. The conduit operation is financed in part by a warehouse line from MetLife. The CMBS trading desk is headed by veteran trader Geordie Walker, formerly of Bank of America and predecessor NationsBank. He joined in late 2008, when Cantor broadened its trading focus to include CMBS.

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