Bank restructurings in the second half of last year contributed to a net decline in MBS holdings at banks, UBS analysts said in recent research.
Selling was primarily in lower coupon MBS, some of which was offset by the purchase of higher coupons. The lack of support has caused certain sectors traditionally favored by banks - such as seasoned 15-years - to have become very cheap, analysts said. They expect, however, to see some realignment as the bulk of restructurings are done. The sector is also seen as attractive enough for TRR money managers to enter.