(Bloomberg) -- Blackstone Inc.’s plan to sell a $1.275 billion bond backed by commercial real estate debt is now on hold while issuance of the debt continues to soar.

A group of banks including Morgan Stanley and Bank of America Corp. were in the process of selling the single-asset, single-borrower bond, which was backed by mortgage debt tied to more than 60 industrial properties located across 13 states. But the spread on the bonds became too wide and the sponsor decided to halt the sale process, said people with knowledge of the matter who asked not to be identified as the details are private.

The transaction was an opportunistic refinancing, not tied to upcoming maturities, said one of the people.

Barclays Plc, Goldman Sachs Group Inc. and JPMorgan Chase & Co. were also working on the bond sale and had expected to price the CMBS last week. Fitch Ratings withdrew its expected ratings of the bonds Wednesday as the deal is no longer on the market.

Spokespeople for Blackstone, JPMorgan, Goldman Sachs, Barclays, Bank of America and Morgan Stanley declined to comment.

Issuance of commercial mortgage backed securities is up sharply so far this year, with overall issuance of private label deals at $42.8 billion, up more than 180% compared with the same point last year, according to data compiled by Bloomberg News. 

Most of that increase is being driven by higher issuance of single-asset single borrower deals, where Blackstone has been a dominant player, refinancing billions of dollars in CMBS debt and accounting for as much as half of the market. Altogether, such deals tied to particular borrowers make up two-thirds of this year’s issuance so far, compared with only around 40% at the same point last year, according to data compiled by Bloomberg. Blackstone has refinanced about $15 billion of CMBS loans this year, a person said.

Blackstone’s $1.275 billion deal was backed by an interest-only mortgage loan tied to industrial facilities in Minnesota, Georgia, Colorado, Florida, California, Texas, Utah, Nevada, New Jersey, Pennsylvania, New York, North Carolina and Massachusetts, according to a Fitch Ratings presale report. The proceeds of the loan were expected to be used to refinance about $714 million of existing debt as well as return more than $182 million of equity to a Blackstone affiliate, among other uses, the report noted.

Risk premiums on commercial real estate debt, including CMBS, have tightened sharply this year after 2023’s regional bank failures triggered concerns about the asset class that some viewed as “overly bearish.”

Spreads on newly issued CMBS bonds rated BBB- were 6.65% percentage points over SOFR swaps as of June 7, down from over 9% percentage points at the start of the year, according to data from JPMorgan.

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