...Forecasts of #### CMBS issuance volume ha ve fallen dramatically over the past year. But few predicted the intensity of the drop-off. After a remarkably slow start to the year, issuance for the first half of #### totaled just over $## billion, a low not seen since the first half of ####. Issuance through June of this year is ##% less than the issuance in the first six months of ####, which totaled almost $### billion. See Figure # .Not only is issuance volume down for the first half, but the pipeline has dried up as well due to the fact that the economics of conduit loan origination have completely flipped from what prevailed over the past ten years. Conduit shops have stopped making loans because bond pricing makes it uneconomic to do so. There is little incentive for conduit lenders to continue originating when portfolio lenders are offering borrowers rates that are ### ba sis points below the rate necessary to breakeven in a capital markets execution. ...

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