Dwindling home price appreciation has its perks after all. After ending the first half with issuance flat to the same period last year, the ABS market is poised to do a bit better for the rest of 2006, owing mainly to strong performances from the student loan and credit card sectors.

The more technical aspects of the ABS market grabbed most of the attention in the first half of 2006, wrote Peter DiMartino, managing director of ABS and mortgage credit strategy at RBS Greenwich Capital. ABS spreads tightened significantly across all products, credits and maturities, he wrote, as investors and issuers both benefited from demand for yield. In particular, "double-A and single-A HELs were 13 to 35 basis points tighter, with cards two to six basis points tighter and autos, equipment and student loans two to seven basis points tighter."

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