The Federal Reserve Bank of New York said late yesterday that it had rejected five bonds while accepting 81 for the October Legacy CMBS TALF subscription.

"We think the market will be a little surprised at the rejection list this month," Bank of America/Merrill Lynch analysts said. This is both in terms of the number of bonds rejected and some of the bonds on the list, they said.

Analysts are still urging the NY Fed to release more information, most important are the reasons for the rejection of bonds.

According to BofA/Merrill, the most surprising of the rejected collateral was BACM 2007-1 Class A3. Although this particular tranche has not been put up for subscription before, according to analysts, the A4 tranche was accepted in both the August and September cycles.

"There does not appear to be one trigger that is used for the determination of acceptable collateral," BofA/Merrill analysts said.

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