Mezzanine-level subprime bonds backed by Texas loans are likely to have higher valuations than mezzanine subprime bonds without Texas exposure, according to a report published today by Opera Solutions.

Opera Solutions research has previously shown that Texas mortgages had the highest average interest rates and lowest LTV among major non-agency RMBS mortgage markets. The latest findings show that the higher interest rates may be significant enough to justify higher bond valuations.

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