A funny thing happened to triple-A home equity spreads last week - they widened significantly and some spreads on two-year maturities stayed in double-digit territory. A couple of those highly rated tranches on home equity deals came in at eight basis points over the one-month Libor, one market observer said.

Case in point: the Residential Asset Mortgage Trust 2006-RS4, which came to market via RBS Greenwich Capital, saw its top tranche price at that level, while the two-year piece priced at 11 basis points over the same benchmark.

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