New Set of ABX's to Begin Trading Today

A new set of Asset Backed Securities [ABX] will begin trading today. The 07-2 ABS series will gauge mortgages originated during the first half of the year.

Some have speculated that the coming introduction of the 07-2 led to some liquidation of 07-1s this week. These days, the triple BBB- 07-1 tranche sits at a moribund 45.

I'm not so sure I buy into the idea of rotational preparation as a reason for the the 07-1 meltdown of the last few weeks, although on Wednesday there was a modest snap back.

Since subprime didn't become a red alert issue well into late February, and early March, it's not hard to imagine that this stuff will be as toxic looking as the 07-1 series. For good measure, the new series will also have a larger percentage of 40 year loans.... yes, 4 - oh.... 40, forty, not a typo.