In a recent report, Barclays Capital analysts talked about 22 WALA FNCI 4.5 as a security that has seasoning "with a twist." This is in light of mortgage investors concerning themselves about the implications of seasoning for prepayment speeds on MBS collateral.
Analysts said that seasoning often leads to faster speeds in discount MBS. This causes premium accretion, which is the reason why investors pay up for seasoned pools over TBA. However, that is only half the story in deep discount bonds, analysts said. Seasoned discounts are shorter compared to TBA, a fact that can be an extremely valuable source of return - and one that many investors actually overlook. Seasoned (22 WALA) FNCI 4.5 pools fall into this category and at current pay-ups, they are extremely attractive versus TBA, analysts stated.