Consider a CMBS with the following characteristics:

• Backed by $20M mortgages, 7% interest, 5-yr maturity, IO annual payments, no servicer fee
• There are three tranches issued:
  • $13M Tranche A (Senior / Investment Grade CMBS) with coupon rate 5%
  • $7M Tranche B (Junior / Non-investment Grade CMBS) with coupon rate 6%
  • IO residual tranche (no extra collateral, but collects extra interest)

What is the subordination on this CMBS? Give your answer as a percentage. (E.g. enter 3% as 3.)