Royal Bank of Scotland Group is selling bonds backed by commercial mortgages from several borrowers in the first sale of its kind since June 2008, gauging investor demand for the debt amid climbing defaults. The offering, backed by 81 properties in states from New York to Missouri, comprises $240.8m in top-rated securities, according to people familiar with the sale who declined to be identified because terms are private. The new issue highlights a challenge facing Wall Street in reviving the $700bn market as delinquencies rise and the value of mortgages fluctuates. Unlike other banks working on sales, UK-based RBS skirted the risk of holding the debt by not closing the loans as they were being pooled, the people said. RBS bankers have been arranging the deal for several months, they said. “Nobody wants to sit with a huge book of business they haven’t sold,” said John Levy, president of Richmond, Virgina- based real estate investment banking firm John B. Levy & Co. “Accumulating this stuff for the long term is a problem. What if the music stops again?”

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