First CMBS conduit deal in two years nears pricing

NEW YORK, April 7 (Reuters) - RBS Commercial Funding's upcoming $309.7 million commercial mortgage-backed securities deal will become the first conduit sale in about two years and may set a new benchmark for the securities.

The securitization, backed by 81 commercial real estate properties in Texas, New York, Missouri, Wisconsin and New Jersey, is mostly comprised of retail and office properties. RBS and Nataxis are underwriting the sale of securities that are expected to price on Thursday, market sources said.

The deal is seen as a key gauge of investor interest for risks in securities tied to the troubled commercial real estate market and investor confidence in better underwriting of loans.

Price guidance for the securitization's largest $222 million AAA-rated 4.93-year issue is seen at 90 basis points over swaps. A second AAA-rated 2.48-year issue is expected to price at a spread of 80 basis points over swaps, market sources said.

Smaller tranches include an AA-rated 4.98-year issue that is expected to price at a spread of 190 basis points over swaps, an A-rated 4.98-year issue is expected to price at a spread of 290 basis points over swaps, while a BBB-rated tranche is expected to price at a spread of 425 basis points over swaps, market sources said.

The deal is not being sold under the Federal Reserve's Term Asset-Backed Securities Loan Facility, known as TALF. The emergency loan program remains in effect for the new issue CMBS market through June 2010. The TALF program expired for Legacy CMBS, in March.

Developers Diversified Realty sold $400 million of CMBS securities utilizing the TALF program in 2009's fourth quarter. Bank of America and JP Morgan each underwrote CMBS deals for other issuers at year-end. (Reporting by Nancy Leinfuss: editing by Jeffrey Benkoe)