The Federal Reserve’s “Term Asset-Backed Securities Loan Facility”:http://www.newyorkfed.org/markets/talf.html (TALF) saw the sale of its first commercial mortgage bond this week.

The $400 million in debt backed by 28 retail shopping centers was offered up by “Developers Diversified Realty Corp.”:http://www.ddr.com and underwritten by “Goldman Sachs.”:http://www.goldmansachs.com.

According to Dow Jones Newswires, it was the first commercial mortgage bond deal in more than a year and sold at the price it was launched. Multiple media reports indicate that investor demand was strong for the new commercial offering.

As Reuters explained, $324 million of the Developers Diversified debt was eligible for Fed funding, but only $72.2 million was requested through TALF – less than a quarter of the asking price. The news agency said this signaled investors saw the deal as clean enough to buy without incurring costs of the Fed’s financial backing.

“The demand for the $400 million of bonds backed by the Developers Diversified Realty Corp is a strong indication that when you have quality assets and apply the right amount of leverage, you’re going to deliver a product that attracts a great deal of attention,” said James Frischling, president of NewOak Capital, an asset management, advisory, and capital markets firm based in Manhattan.

According to Frischling, “That’s what the Federal Reserve’s TALF program is trying to achieve by offering to play the role of the temporarily sidelined private sector in terms of providing the financing to quality commercial real estate securitizations. If orchestrated and managed correctly, expect to see the spreads on these commercial assets driven tighter. ”

The Fed decided back in June to extend TALF to CMBS, in hopes of jumpstarting the stagnant secondary market for commercial mortgages. But as “DSNews.com reported earlier this month”:http://www.dsnews.com/articles/cmbs-deal-could-open-talf-to-secondary-commercial-market-2009-11-04, the central bank has been cautious about actually using federal credit to help investors purchase such securities because of declining performance in the commercial real estate sector.

Scott Simon, managing director and head of mortgage- and asset-backed securities portfolio management at Pimco, told the Wall Street Journal that this week’s deal could be “a real game changer for the commercial real estate market that has been so devoid of financing.”