GGP Auction Final Results

The GGP final auction clearing price was 44.25: fifth (L)CDS auction in a row that the inside market was surpassed by the final price. As the results indicate, the weighted average price was 42.58, with the lowest average bid provided by JPM at 38.44 and highest (not surprisingly) by fully CRE-pregnant Deutsche Bank at 44.23. Bid to cover is minuscule at 8.06%.

And speaking of DB, they literally gobbled up the auction, with virtually the entire selling interest allotted to the German bank: one wonders, in addition to Las Vegas and every other major collapsing metropolitan market, where else DB might have significant CRE exposure (marked who the hell knows where). As a reference point, of the 20 million in selling interest, DB had $120 million in limit orders above the inside market. Can you spell axed?

Indicatively, I provide the recent trending of GGP TL/A as provided by SMintelligence. Someone is very interested in not letting this price seem like a mere result of a short squeeze. Absent the DB "abovemarket" order flood, the auction may have well cleared markedly lower. Yo, DB CDS trading desk, how much LCDS did you sell and need badly to cover? Is the $120 a rough but fair estimate?

But even at a 44ish price clearance for secured claims, one can only dread what this valuation (of secured debt) implies for both CRE and all other REITs (especially their ludicrous equity valuations).