With collateral spreads historically rich, some ABS CDOs might never make it through the starting gate, especially if nearing the end of their investment periods, industry sources said. At the very least, the market is less likely to see upsized deals in early 2004, which was a frequent occurrence in the sector throughout 2003. In fact, it is possible some deals will reduce in size.

For deals that began purchasing collateral last fall, there may be incentive to dump the assets now and take the gains. "If everyone dumped at once, that could flood the market," one investor said. "The first one out will probably do well, because spreads are at all-time tights, but there would be a point where an equilibrium is reached."

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