The ABS market is showing strong performance across the board. Despite especially heavy supply in the past two weeks, spreads are holding firm across products and ratings categories. The firm notes that short HELs offer good value versus MBS passthroughs given their superior prepayment stability and better convexity especially with virtually all of the MBS market now at premium dollar prices. In addition, AA- and A-rated HEL tranches appear to be attractive given the steep credit curve in this sector.
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