At least three pooled trust preferred securities CDOs, including Preferred Term Securities VI, MM Community Funding IV and an undisclosed issue via Bear Stearns, are now sourcing well over $1 billion in collateral.

Sources report that there is a limited supply of diverse, high-quality regional bank trust preferred securities issuers, making an increasingly competitive landscape challenging for dealers ramping up. Nevertheless, one investor noted that "bad banks often get taken over by good banks and the default history for the trust preferred asset class is fairly impressive."

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