Securitization professionals last week had a lot to celebrate - and bemoan. Just when it looked like the subprime MBS market was emerging from its early-year volatility, the sector destabilized again, triggering an investor rush to sell off CDO and MBS holdings in two Bear Stearns hedge funds (see next page). The overall market, however, generally escaped the volatility that began on midweek in CDOs and which is probably still going on.

Despite widespread news of the hedge fund destabilizations, the ABS market saw a healthy stream of deals with diverse collateral. A $970 million First Franklin Mortgage Loan Trust, led by Merrill Lynch, sold its one-year triple-A-rated tranche at six basis points over the one-month Libor, largely in line with where spreads generally stood about 14 months ago. The $290 million Soundview Home Equity Loan Trust came within a touch of that level, with a similar security that priced at seven basis points over. Coming back for an encore, a separate Soundview transaction amounting to $313 million was being talked at six basis points for its triple-A, one-year piece.

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