Activity has certainly dropped off this week with nothing to speak of in the new-issue pipeline and secondary trading quieted to a few bid lists. If there is anything to be gleaned based on recent activity it is that the pace of new issues, if anything, is lower than expected, making a good case for tighter spreads to come.

The credit curve a week and a half ago was widely viewed as too flat for comfort with lower-rated credits trading at or near historically tight levels. Some of that concern was mitigated with the pricing of the Wachovia conduit on Wednesday, May 15 as triple-B tranches printed 15 basis points wider on average than comparable deals of recent weeks (see the CSFB 2002-CKN2 and BACM 2002-PB2 issues), steepening the credit curve by 20 basis points over the week to near 84 basis points, near their 2001 average of 87 basis points.

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