Many market players found the rather tame start to the new year a bit unexpected. The hefty December calendar promised some spillover, as it was said that issuers, particularly from the CMBS space, would hold on to their deals and wait for a January debut. But the headlines this month have been more about secondary trading action, as market players contemplated benchmark primary pricing levels for the debut RMBS issue of the year. As the month began to wane last week, players finally got a taste of where levels stood - and this came not a moment too soon, because the deal pipeline is starting to flow freely.

Underwriters last week finally priced the generously upsized GBP6.1 billion ($12.1 billion) prime RMBS transaction from Northern Rock's Granite master trust, Granite Master Issuer 2007-1. The first U.K. master trust deal of the year, it was upsized by over GBP700 million. Market sources said that demand for the deal was strong, with the leads successfully pricing the deal at levels inside initial guidance on most tranches. At the triple-A level, the 0.9-year dollar- and sterling-denominated class 1A1 and 1A3 tranches were offered at three basis points, while the $1.45 billion 2.8-year class 2A1 notes priced at seven basis points. The $1.5 billion class 3A1 and 1.65 billion ($2.14 billion) class 3A2 tranches priced at 10 basis points, the 5.4-year class 5A1 notes at 11 basis points and the 6.9-year class 6A1 tranche at a fixed rate for gilts at 51 basis points.

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