By in large, savvy market players seem to favor the CDO of home equity bonds over the underlying bonds themselves, given the added structure, mix of issuers and regions, as well as the pick up in absolute yield. While three-year triple-A home equity-focused CDOs are pricing within a few points of comparable HELs -both currently in the mid 30s - the CDOs are indexed off the three-month Libor compared to the one-month Libor, which picks up about 25 basis points on today's curve.

As a general trend over the past several quarters, structured finance CDOs have shunned sector diversity for sector expertise. This vintage of SF CDOs are particularly heavily concentrated, as investors seem to like these as much as the less homogeneous "real estate" CDOs, which often pack REIT, CMBS and RESI collateral in the same structure.

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