hman Brothers has shifted its bias for ABS to Neutral from Overweight this week, as spreads have tightened to the point of being over valued, the firm said. Despite what it calls "powerful demand technicals" in the ABS market, Lehman believes that ABS spreads "are close to a spread floor," and sees little upside in the current market, with a few notable exceptions.

In its most recent weekly research, Lehman researcher David Heike notes that fixed-rate prime auto and stranded cost ABS are trading in the low single digits over comparable swaps. Floating-rate credit cards are trading flat to Libor at the front end of the curve and home equity ABS, meanwhile, are at all-time tight spreads.

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