Artis Real Estate Investment Pref Shs Series E T.AX.PR.E

Btfp program and the reverse repo (Rrp)

[Torontojay]

Today is the expiration date for the commercial banks to receive a bailout for distressed collateral assets. The bandaids will be removed but the interest rates are even higher than during the SVB debacle. Approximately $100 billion in loans by the Fed will have to get repaid by June of this year. Banks will tighten lending standard at an even greater scale as the Btfp and Rrp facility reach an end. Janet Yellen has $444 B (Rrp) left from the pandemic to use for her Treasury General Account. Fiscal deficits are running at about $1 trillion every 100 days so I expect the Rrp facility to be drained in a matter of months not years. 

What is going to happen to cmbs loans when the Fed is no longer there to bailout these banks? Will the Fed introduce a new program to deal with the potential defaults that may arise if we have another banking crisis? According to my estimates, there are $900B - $1 T in Cre's that have to be refinanced with an estimated  ~15% default rate. That is a staggering number and one that every investor should be paying close attention to.