Pass-Throughs Edge Higher As Buying Covers Spectrum
April 27, 2011
Traders reported there was no clear pattern of buying demand, but all agreed with the trader at a regional firm who said the day was ``not so busy as one might wish.'' The big exception to the summer calm was collateralized mortgage obligations. Collateralized mortgage obligations are mortgage-backed securities that have been sliced into parts to offer different yields and different levels of risk. Federal Home Loan Mortgage Corp. announced three new CMO offerings totaling $720 million. The biggest, to be underwritten by Nomura Securities International Inc., is a $420 million CMO based on interest-only strip tranches from existing CMOs. Also being offered is a $150 million callable CMO based on 7.5% 30-year callable pass-throughs, underwritten by Bear, Stearns & Co., and a $150 million CMO based on 7% 15-year pass-throughs, brought to market by Lehman Brothers Inc.. In the pass-through market, current coupon 30-year certificates were up 2/32, underperforming a late-afternoon surge in Treasurys after keeping track for much of the day. A pass-through is a security made up of a pool of debt instruments, with the income from the debt passed through an intermediary -- usually a government agency or investment bank -- to the investors.
VastPress 2011 Vastopolis
