Within triple-As, Merrill is cautious of the premium dollar price sector, especially the super premiums, and favors the lower dollar-priced securities. While triple-As may meet some marginal widening, the stretch for yield is still very much in play and is keeping the more credit sensitive, higher yielding securities well bid. Triple-Bs and IOs are in great demand and spreads for these bonds have ratcheted in. Pricing of last few new issues is indicative of demand. Analysts have not seen the below IG sector follow suit. While double-Bs are in slightly, they have lagged tightening in triple-Bs and IOs.

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