UPDATE 1-Deutsche Bank, JP Morgan team up for US$818m CMBS deal

(adds detail of transaction, background, quotes)

NEW YORK, March 28 (IFR) - Deutsche Bank and JP Morgan have teamed up for the first time since the crisis to underwrite a conduit commercial mortgage bond by themselves, according to investors and syndicate sources.

The US$818m deal includes only loans made by Deutsche and JP Morgan, whereas most conduit deals sold in the past five years have included collateral from much smaller, non-bank lenders that are known for making riskier loans.

The shift in tactic comes as the US$600bn CMBS market has struggled to find its feet after a steep selloff.

Two weeks ago, Wells Fargo was able to slightly dial back spreads from their multi-year wides with a smaller US$712m transaction that included smaller lenders in its pool.

That deal’s benchmark 10-year Triple A rated class cleared at Swaps plus 143bp.

Investors, who expect intial price thoughts to roll out later on Monday, said bankers hope the absence of smaller lenders will help Deutsche and JP Morgan build on that deals’ momentum.

“The expectation is that JP Morgan and Deutsche Bank will come in the same vicinity of the Wells Fargo deal,” said one buyside source watching the transaction. (Reporting by Joy Wiltermuth; Editing by Marc Carnegie and Shankar Ramakrishnan)