Issuance of home equity line of credit-backed ABS is on a torrid pace halfway through the year - having topped the $10 billion mark last week - and spreads are starting to show the effects of the supply. After having pushed the 20 basis point threshold over Libor, spreads have moved out on recently priced transactions to the mid-20 basis point area over Libor.

An attractive option for borrowers who have already executed cash-out refinancings over the past three years, HELOC origination has spiked in the last year, leading to the current spate of HELOC ABS issuance. According to the Federal Reserve, depositories hold $1.2 trillion of HELOCs on their balance sheets.

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