Goldman Sachs to Issue Commercial-Backed Debt Through TALF Program

by LJ Miehe on October 9, 2009

Bloomberg, New York – Goldman Sachs Group Inc. may sell the first commercial-mortgage bond since June 2008, taking advantage of an untapped Federal Reserve program.

The five-year, $400 million loan to Developers Diversified Realty Corp. made by a unit of the New York-based bank is secured by 28 shopping centers. Developers Diversified Realty Corp. It will be used to repay debt on those properties and others, and to reduce the outstanding amounts of credit facilities, Developers Diversified said yesterday in a statement.

Developers Diversified and Goldman Sachs are working with the Fed to qualify the loan for the central bank’s Term Asset- Backed Securities Facility to unfreeze the $700 billion market for securities backed by commercial mortgages, according to the statement.

“An actual close at reasonable terms would be a significant positive for new-issue TALF which has been slow to get off the ground,” said Aaron Bryson, an analyst at Barclays Capital in New York.

The pipeline of issuers under TALF has shrunk as unsecured debt markets opened up to real estate companies, and this deal would mark the first since the Fed program was opened to newly issued commercial-mortgage-backed securities in June.

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