The TABX index began trading Feb. 14 at spreads much wider than a number of market players had anticipated. While not as shocking as, say, Britney Spears' new buzzcut, aside from structural differences, the trend in the TABX so far could indicate that investors place quite a bit of value in a CDO manager's ability to handpick good credits and trade out of bad ones. The implied triple-A tranches of the TABX came out of the gate pricing north of 100, double-As between 600 and 800, single-As between 1,400 and 1,800, triple Bs at nearly 2,000 and double-Bs between 2,000 and 3,000 basis points, according to JPMorgan Securities analysts, who described the pricing divergence against the back of mezzanine SF CDO spreads as "almost shocking."

"Managed cash CDOs get a lot of credit for diversity, infrastructure, selection, and surveillance," Deutsche Bank analysts said in a report last week. As of Wednesday, the triple-B-minus 0% to 5% was trading two points below the Feb. 16 close in the $30 range, while the 40% to 100% tranche was trading five points below, in the $92 range, according to Credit Suisse.

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