The Federal Reserve's first subscription involving legacy commercial mortgage-backed securities attracted $668.9 million in requests for TALF financing, but analysts at Bank of America/Merrill Lynch Research expect better participation in the second subscription on August 20.

"Over the next month we think more investors will gear up and ... the next subscription should see greater participation," the analysts said in their weekly Mortgage Investor report. They noted that the Fed just opened the Term Asset-Backed Securities Loan Facility to legacy CMBS and some investors held back because of the "lack of clarity about which bonds would be rejected because of credit concerns" at the New York Federal Reserve Bank."

As a result our assumption is that many that participated in the first go-around were simply "testing the waters.''

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