In the wake of last week's launch of a $176 million reperforming-loan securitization by C-BASS and underwriters Merrill Lynch, market observers are saying that improving credit enhancement levels and a robust economy are making such "scratch and dent" collateral increasingly attractive to investors - possibly setting the stage for a year where reperforming and nonperforming deals finally solidify their visibility in the marketplace.

Sources say that the history of poorly performing credit-sensitive deals from the last several years have been factored into the market recently, allowing current issuers to add the proper credit enhancement - such as excess cash or a monoline insurance wrap - in order to get the sort of attention that they have been looking for with these transactions.

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