[With Subtitles} AAA Derivatives Are Starting To Collapse...Is This GFC 2.0? -- For The First Time Since The Financial Crisis, CMBS Investors Face Europe's First AAA Loss

This wasn't supposed to happen... or rather this wasn't supposed to happen outside of a crisis (and certainly not with stocks at all time highs).

Sure, the "impossible" did happen back back in April 2020, just as the world was about to break and the Fed was injecting trillions into the system. That's when we first reported that "Something Impossible Just Happened: A CLO Failed Its AAA Overcollateralization Test." So yes, while the AAA tranche of any structured vehicle is supposed to be guaranteed from impairments even in a 6-sigma event (not really: it happened quite frequently during the global financial crisis) that was hardly the case four years ago, but then again, with the world locked down for covid, the S&P crashing 30% in a week, and amid general panic, it's safe to say that nobody noticed.

But then it happened again and this time there was no crisis: in the last week of May we learned that for the first time since the Lehman bankruptcy, Investors holding the top-most tranche debt backed by commercial real estate have suffered losses for the first time since the housing meltdown collapsed the economy 16 years ago. According to CMBS strategists at Barclays, buyers of the AAA portion of a $308 million note backed by the mortgage on the 1740 Broadway building in midtown Manhattan received less than three-quarters of their initial investment in recent weeks after the loan was dumped at a sizeable discount. All low-tier creditors were wiped out.

Read document HERE: https://www.zerohedge.com/markets/first-time-financial-crisis-cmbs-investors-face-europes-first-aaa-loss