Even as spreads on home-equity ABS reach dizzyingly tight levels, analysts are still touting them as the best place to find relative value in the ABS market. As always, the question remains just how tight spreads can come in. The answer, for now, is quite a bit.

Last week's $1 billion offering from Centex Corp.'s Centex Home Equity Loan Trust, with fixed and floating portions, shocked the market with spreads on some of its floating-rate tranches. The largest tranche of the deal, a $339 million one-year sequential floater, priced at a slim seven basis points over one-month Libor, shattering previous spread lows for 1-year tranches. The deal's three-year floating tranche priced at 17 basis points over Libor, also considered to be a new tight.

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