Last Wednesday, participants in the ABX.HE for the first time ushered in a fresh series of deals with what seemed to be little fanfare. While not everyone shared the same view on credit characteristics underlying the new index, called the ABX.HE 06-2, many felt that market technicals would drive much of the early spread activity. As of last week, a number of sources were expecting ABX.HE 06-2 spreads to settle at a thinner level than those on the initial ABX.HE 06-1 index - particularly at the lower end of the capital structure.

"Because of the HEL spread tightening in the first half of this year, opening coupon prices on the second index will be significantly lower' then the coupons on the first set," RBS Greenwich Capital analysts said last week.

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