Last week, Fannie Mae issued its fourth Multifamily Assured Scheduled Payment Trust (MAST), FNMA 2001-T11.

With this, total issuance for the program equals $2.5 billion with another deal scheduled for January.

According to Salomon Smith Barney, FNMA's program provides for 10-year bullet cash flows because all the underlying loans mature in the same month. In addition, prepayments are only allowed through defeasance.

In the event of default, FNMA will substitute similar collateral or advance P&I through to the expected maturity. At this time, FNMA 2001-T11 B is trading at swaps plus 20 basis points, which looks cheap considering the guaranteed cash flow.

The triple-A and triple-B CMBS sectors also appear cheap versus other benchmarks. For example, last week's pricing of MSDWC 2001-IQ had the five-year triple-A pricing at swaps plus 61 basis points and the 10-year triple-A at swaps plus 63 basis points.

According to Salomon, this is 15 to 18 basis points wide of where spreads were prior to Sept 11. In addition, the firm estimates that 10-year triple-As should trade at a 57 to 59 basis point differential to 10-year agencies.

At this time, the triple-As are about 67 basis points behind agencies, "suggesting there is room for 10 basis points of tightening." The sector also appears cheap to credit cards where the differential is 9-15 basis points wider than its one-year average.

Bank of America's Michael Youngblood is also a fan of the sector. He notes the sector improved two basis points this week to the 10-year triple-A new issue conduits and now lies at its one-year average.

Salomon also likes triple-Bs. They estimate that the triple-B to triple-A difference is currently 13 basis points wider than the one-year average credit slope. Versus corporates and credit cards, triple-Bs are now 25 basis points wide and nine basis points wide, respectively, of the one-year average differential.

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