Because of the weight of CMO supply, IOs have become cheaper, a topic hitting bank research last week.

UBS Warburg researchers argued that the biggest development during the past few weeks has been IO devastation - the sector has gone from quite rich to somewhat cheap. With the CMO market throwing off a significant amount of structured IO product over the last month, this has resulted in a glut of IO-type cash flows. Analysts said that the demand for cash flows was weakened because of the higher-than-expected March prepayments and a very high Mortgage Bankers Association (MBA) Refinancing Index on March 12.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.