Throughout last year, the triple-B minus class became a routine feature in most mortgage-related ABS deals. Late in 2003, however, the real estate sector began dipping below the investment-grade Mendoza line, flaunting a double-B rated class. Already in 2004, nine real estate deals - from both lenders and dealer shelves - have featured these small high yield tidbits, and sources anticipate the trend will take hold. Buysiders, however - even those who recently bought these classes - caution that double-Bs are not for everybody, but only the most sophisticated investor.

The double-B tranches have been slim cuts of the overall offerings, which range from $730 million to $3.15 billion in total size, with the bottom tranche making up barely 1% of the deal on average. The classes are almost exclusively offered in the private, Rule 144A market and are driven primarily via reverse inquiry interest.

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