medium · Asset-Backed Securities asset-nuances
An investor is analyzing a 'Single-Asset Single-Borrower' (SASB) CMBS deal vs. a standard 'Conduit' CMBS.
What is the PRIMARY credit risk trade-off the investor makes when choosing the SASB deal?
- Prepayment risk vs. Extension risk; SASB loans carry no meaningful call protection.
- Interest rate risk vs. Credit risk; SASB deals are structured as floating-rate obligations by design.
- Concentration risk vs. Diversification; SASB lacks the 'granular' pool benefit of a conduit.
- Lower LTV vs. Higher DSCR; conduit loans are always underwritten more conservatively than SASB loans.
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