The dichotomy of tight bids on CDOs and a deteriorating high-yield bond market continued last week.

Despite anecdotes of high-yield deals with swelling triple-C buckets from the 1997-1999 vintage, Loomis Sayles Co.'s $285 million HY CBO appears poised to print in the area of 40 basis points over six-month Libor on the triple-As. Loomis has been seen marketing as tight as 38 basis points, with the tightest bids coming from the new conduits in Europe, sources speculated, though the orders were not enough for lead manager Salomon Smith Barney to complete the triple-A tranche at those levels. Bankers say CDOs haven't broken the 40 basis points over Libor floor since the Russia defaulted in 1998.

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