LAGUNA NIGUEL, CALIF. - While most seem to think the residential -heavy CDO market will naturally shift toward deals with more diverse pools of assets as investors voice concern over the U.S. housing market, some are noting to the contrary.

During a panel discussion at Opal Financial Group's CDO Summit held here last week, John Joshi of Countrywide Alternative Investments Inc. said that while setting up his unit during the last eight months, he has heard from investors that they'd like to see higher residential mortgage concentrations within CDO pools. "The CDO market is acting like the older re-REMIC market," Joshi said, adding that investors have been asking him for CDOs with single issuer concentrations of anywhere from 50% to 100%. That scenario is, of course, better for equity investors than for triple-A investors, who would prefer a more diverse pool, he added.

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