Financial Times carried a report June 5 on various U.S.-based banks which are selling off commercial real estate loans at a loss, even to include many loans which are still being paid in full and on time, and the commercial mortgage-backed securities (CMBS) based on them. The FT article is “U.S. Banks prepare for losses in rush for commercial property exit,” https://www.ft.com/content/3e905e3c-697c-4109-bd9a-605e75a0cfa4 ]. According to the report, HSBC USA seems to be leading the way, although the first bank to do so was actually Pacific Western, which sold $2.6 billion of commercial real estate mortgages at a 20% loss to pay out departing depositors.
The commercial real estate losses are one factor which will keep the crisis in the U.S. banking sector going. And on top of the commercial real estate failures and defaults which have begun (cf., another on June 5, when Park Hotels & Resorts announced it was defaulting on a $725 million bank loan backed by CMBS), Treasury interest rates have begun to rise again, as the Treasury begins to sell what is estimated by Goldman Sachs to be a “flood” of $1 trillion of Treasury securities after the debt ceiling was raised.
