Deutsche Bank to Nomura Caution CMBS Investors After 25% Surge

Deutsche Bank AG and Nomura Holdings Inc. are urging caution as investors gorge on junk-rated commercial-mortgage bonds, wagering that economic growth in the U.S. will curb losses.

Prices on so-called AJ bonds have climbed as much as 25 percent since December, according to Deutsche Bank. The bonds, which were rated AAA when they were issued during the years leading up to the property market crash in 2007, were downgraded as delinquencies on boom-era commercial mortgage soared past 13 percent, according to Wells Fargo & Co.