Investors in traditional private placements are turning more and more to commercial mortgage backed securities to find value amid a private placement market that has been slow to take off in 2008. Though it is no secret that insurance companies, the main investors in private placements, invest a good portion of their funds in CMBS, buyside sources said they are looking at the asset class more this year.

One private placement investor at a large insurance company said he recently bought CMBS paper for the first time in two years. The deal was AA'-rated and carried a spread of 375 basis points. "It's attractive because of the yield, but we would not go lower than double-A," said the buysider.

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