Even though spreads for CDOs backed by structured finance and high yield loan collateral continue cranking tighter, the return is "more than fair" in the triple-B rated tranches of those deals, where tightening has not kept pace with higher-rated tranches, according to a recent UBS report. For example, while triple-A and double-A rated structured finance CDOs are at their tightest-ever spread levels, single-A and triple-B rated tranches are 20 and 65 basis points wider than historic tights, respectively, according to UBS.

And investing in those assets is a better bet than placing money in similar yielding corporate bond portfolios, they advise.

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